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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 27, 1999
WESTECH CAPITAL CORP.
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(Exact name of registrant as specified in its charter)
NEW YORK 33-37534-NY 13-3577716
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1250 Capital of Texas Highway, South, Suite 500, Austin, Texas 78746
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (512) 306-8222
180 West End Avenue, Apt. 23F, New York, New York
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(Former address)
ITEM 1. Changes in Control of Registrant
(a) On August 27, 1999, pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated August 20, 1999, by and among Westech
Capital Corp., a New York corporation (the "Company"), Tejas Holding
Company, Inc., a Texas corporation ("Tejas Holding"), Tejas Securities
Group, Inc., a Texas corporation ("Tejas"), and Westech Merger Sub,
Inc., a Delaware corporation ("Merger Sub"), Merger Sub, a wholly owned
subsidiary of the Company, was merged with and into Tejas Holding, the
parent company of Tejas, with Tejas Holding being the surviving
corporation.
Prior to the Merger, 4,808,555 shares of no par common stock of Tejas
Holding (the "Holding Common Stock") were issued and outstanding to a
total of eleven shareholders, and Tejas Holding's sole asset was
4,808,555 shares of Tejas no par common stock (the "Tejas Common
Stock"). The Tejas Common Stock held by Tejas Holding represented
82.90% of the issued and outstanding Tejas Common Stock. As
consideration for the Merger, each share of Holding Common Stock issued
and outstanding as of the date of the Merger was exchanged for one
share of Company common stock, $.001 par value per share (the "Westech
Common Stock"). Giving effect to the Merger, an aggregate of 5,408,536
shares of Westech Common Stock are issued and outstanding.
In connection with the Merger, Michael J. Tannenholtz and Dr. William
Esh resigned as directors of the Company effective August 26, 1999.
Following these resignations, Neil Ragin appointed John Gorman and Jay
W. Van Ert to fill the vacant positions on the Company's board of
directors
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(the "Board of Directors") and immediately thereafter resigned as a
director. Effective August 27, 1999, the Board of Directors appointed
Joseph F. Moran to fill the vacancy left by Mr. Ragin.
The former shareholders of Tejas Holding now own 88.91% of the issued
and outstanding Westech Common Stock. John J. Gorman (Chairman of the
Board of Directors and Chief Executive Officer), Jay W. Van Ert
(President) and Joseph F. Moran (Managing Director) may each be deemed
to be in control of the Company by virtue of their stock ownership and
their respective positions as directors and officers of the Company.
Messrs. Gorman, Van Ert and Moran own 2,329,078, 461,428 and 1,000,049
shares of Westech Common Stock, respectively, or 43.06%, 8.53% and
18.49%, respectively, of the issued and outstanding Westech Common
Stock.
A copy of the Merger Agreement is attached hereto as Exhibit 1.1 and is
hereby incorporated by reference. The foregoing description of the
Merger Agreement is qualified in its entirety by reference to the full
text of such Exhibit 1.1.
(b) The Company does not know of any arrangements, including any pledge by
any person of securities of the Company, the operation of which may at
a subsequent date result in a change in control of the Company.
ITEM 2. Acquisition or Disposition of Assets
Giving effect to the Merger, the Company is the sole shareholder of
Tejas Holding, which owns 82.90% of the issued and outstanding Tejas
Common Stock. The assets of Tejas represent substantially all of the
assets of the Company.
Tejas is an Austin-based full service brokerage firm serving financial
institutions and private investors throughout the United States. Tejas
specializes in investment banking, securities research and equity and
portfolio management. Tejas' clientele includes both companies issuing
equity and debt securities and commercial banks, insurance companies,
mutual funds, private investors and other organizations with
significant equity and fixed income portfolios.
ITEM 4. Changes in Registrant's Certifying Accountant
On August 31, 1999, KPMG LLP replaced Scott & Guilfoyle as the
independent accountant engaged to audit the financial statements of the
Company.
Scott & Guilfoyle's report on the financial statements of the Company
for the past two years did not contain an adverse opinion or disclaimer
of opinion and was not qualified as to uncertainty, audit scope, or
accounting principles. The decision to change accountants from Scott &
Guilfoyle to KPMG LLP was approved by the board of directors of the
Company. During the two most recent fiscal years and through the date
of their replacement, there were no disagreements between Scott &
Guilfoyle and the Company on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure, which disagreement, if not resolved to the satisfaction of
Scott & Guilfoyle, would have caused it to make reference to the
subject matter of the disagreement in connection with this report.
Attached hereto as Exhibit 4.1 is a letter from Scott & Guilfoyle
stating that they agree with the statements made by the Company
pursuant to this Item 4.
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ITEM 5. Other Events
In connection with and in preparation for the Merger, the Company
effected a stock split in the form of a stock dividend by issuing
2.28767 new shares of Westech Common Stock for each share of Westech
Common Stock issued and outstanding to stockholders of record on August
13, 1999. Holders of Westech Common Stock who would otherwise be
entitled to receive fractional shares as the result of the stock split
are entitled to cash in lieu thereof at the rate of $.076 per share
(payable to the nearest $.01).
Following the Merger, the Board of Directors elected the following
persons to the offices set forth opposite their respective names:
Chief Executive Officer John J. Gorman
President Jay W. Van Ert
Chief Operating Officer Charles Mayer
Managing Director Joseph F. Moran
Secretary and Treasurer Greg D. Woodby
Director of Finance John F. Garber
Director of Compliance Reed A. Durant
ITEM 7. Financial Statements and Exhibits
No financial statements are filed herewith. The financial statements of
Tejas will be filed by amendment not later than 60 days after the date
that this report on Form 8-K must be filed.
ITEM 8. Change in Fiscal Year
On August 27, 1999, the Company elected to change its fiscal year end
from June 30 to December 31. The Company's September 30, 1999 Form 10-Q
will reflect the new fiscal year end.
EXHIBITS
1.1 Agreement and Plan of Merger by and among Westech Capital Corp.,
Westech Merger Sub, Inc., Tejas Securities Group Holding Company, and
Tejas Securities Group, Inc.
4.1 Letter from Scott & Guilfoyle regarding change in accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Westech Capital Corp.
Date: September 8, 1999 By: /s/ Jay W. Van Ert
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Jay W. Van Ert, President
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
1.1 Agreement and Plan of Merger by and among Westech Capital Corp.,
Westech Merger Sub, Inc., Tejas Securities Group Holding Company,
and Tejas Securities Group, Inc.
4.1 Letter from Scott & Guilfoyle regarding change in accountants.
</TABLE>
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EXHIBIT 1.1
AGREEMENT AND PLAN OF MERGER
AUGUST 20, 1999
BY AND AMONG
WESTECH CAPITAL CORP., WESTECH MERGER SUB, INC., LAWRENCE
KAPLAN, TEJAS SECURITIES GROUP, INC. AND TEJAS SECURITIES GROUP
HOLDING COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Vote on Merger and Related Matters.......................................................................2
2. Representations, Warranties and Covenants of Tejas Holding and Tejas.....................................2
3. Representations and Warranties of Merger Sub and Kaplan.................................................17
4. Representations and Warranties of Westech and Kaplan....................................................19
5. Representations to Survive Closing......................................................................25
6. Surviving Corporation...................................................................................26
7. Treatment of Shares of Constituent Corporations.........................................................26
8. Rights and Liabilities of Surviving Corporation.........................................................26
9. Further Assurances of Title.............................................................................27
10. Conditions of Obligations of Merger Sub and Westech.....................................................27
11. Conditions of Obligations of Tejas......................................................................29
12. Abandonment.............................................................................................31
13. Closing or Termination..................................................................................32
14. Delivery of Corporate Proceedings of Westech............................................................32
15. Delivery of Corporate Proceedings of Merger Sub.........................................................32
16. Delivery of Company Proceedings of Tejas................................................................32
17. Limitation of Liability.................................................................................32
18. Further Instruments and Actions.........................................................................33
19. Governing Law...........................................................................................34
20. Notices.................................................................................................34
</TABLE>
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TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
21. Binding Agreement.......................................................................................33
22. Counterparts............................................................................................33
23. Severability............................................................................................33
24. Joint Drafting..........................................................................................33
</TABLE>
Tejas Schedule of Exceptions
Exhibit A Certificate of Merger - Delaware
Exhibit B Articles of Merger - Texas
Exhibit C Westech Common Stock
Exhibit D Investor Questionnaire
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AGREEMENT AND PLAN OF MERGER made as of this 20th day of August, 1999,
by and between Westech Capital Corp., a New York corporation having its
principal place of business at 180 West End Avenue, Apartment 23F, New York, New
York ("Westech"), Westech Merger Sub, Inc., a Delaware corporation and a
wholly-owned subsidiary of Westech having its principal place of business at 180
West End Avenue, Apartment 23F, New York, New York ("Merger Sub"), Lawrence
Kaplan, an individual residing at 17 Riverview Terrace, Smithtown, New York
("Kaplan"), Tejas Securities Group Holding Company, a Texas corporation having
its principal place of business at 1250 Capitol of Texas Highway South, Suite
500, Austin, Texas 78746 ("Tejas Holding"), and Tejas Securities Group, Inc., a
Texas corporation and a subsidiary of Tejas Holding having its principal place
of business at 1250 Capitol of Texas Highway South, Suite 500, Austin, Texas
78746 ("Tejas").
WHEREAS, the respective Boards of Directors of Westech, Merger Sub,
Tejas Holding and Tejas (collectively the "Companies") deem it advisable and to
the advantage and welfare of the Companies and their respective stockholders
that Merger Sub be merged with and into Tejas Holding under the terms and
conditions hereinafter set forth (the "Merger") as a tax-free reorganization
under Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the
"Code"), pursuant to the Texas Business Corporation Act and the Delaware General
Corporation Law; and
WHEREAS, in connection with and in preparation for the Merger, the
respective Boards of Directors of the Companies deem it advisable and in the
best interest of the Companies that Westech, which presently has 182,500 shares
of common stock, par value $.001 per share ("Westech Common Stock") outstanding,
undergo a stock split in the form of a stock dividend (the "Stock Split") by
issuing 2.28767 new shares of Westech Common Stock for each one share of Westech
Common Stock currently outstanding to stockholders of record on August 13, 1999,
resulting in their being no more than 600,000 shares of Westech Common Stock
outstanding
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immediately following the Stock Split (the "Westech Common Shares").
NOW, THEREFORE, in consideration of the premises, the parties hereto do
mutually agree as follows:
1. Vote on Merger and Related Matters. Westech and Merger Sub shall, as
soon as practicable but in no event later than 5 days after the execution and
delivery hereof, authorize and approve the Stock Split, subject to the
consummation of the Merger, in accordance with the terms hereof. On or prior to
the 15th day following the Merger, Westech stockholders who would otherwise be
entitled to receive fractional shares as the result of the Stock Split shall be
paid cash in lieu thereof at the rate of $.076 per share (payable to the nearest
$.01). Tejas Holding shall, as soon as practicable and in no event later than 15
days after the execution and delivery hereof, cause a special meeting of its
stockholders to be called to consider and vote upon the Merger on the terms and
conditions hereinafter set forth or seek the written consent of such
stockholders as are necessary to approve the Merger in accordance with Texas
law. If the Stock Split and the Merger are approved (subject to the further
conditions and provisions of this Agreement) a closing shall be held at the
offices of Winstead Sechrest & Minick in Austin, Texas (the "Closing"). On such
date (the "Closing Date"), Articles of Merger and a Certificate of Merger and
all other documents or instruments deemed necessary or appropriate by the
parties hereto to effect the Merger shall be executed and filed with the
Secretary of State of the States of Texas and Delaware, respectively. The
Certificate of Merger to be filed in Delaware shall be substantially in the form
of Exhibit A annexed hereto, with such changes therein as the Boards of
Directors of Westech and Tejas Holding (the "Constituent Corporations") shall
mutually approve and the Articles of Merger to be filed in Texas shall be
substantially in the form of Exhibit B annexed hereto, with such changes therein
as the Boards of Directors of the Constituent Corporations shall mutually
approve.
2. Representations, Warranties and Covenants of Tejas Holding and
Tejas. Tejas
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Holding and Tejas jointly and severally represent and warrant as follows, except
to the extent set forth on the Tejas Schedule of Exceptions annexed hereto and
made a part hereof ("Tejas Schedule of Exceptions"):
(a) Organization: Tejas Holding and Tejas have each been duly
organized, are validly existing, and in good standing under the laws of
the jurisdiction of their respective organizations and have all
requisite corporate power and authority to own, lease and operate their
respective properties and assets and to carry on their respective
businesses as now being conducted. Tejas is duly qualified or licensed
to do business and in good standing in each jurisdiction in which the
properties and assets owned, leased or operated by it or the nature of
the business conducted by it makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed
and in good standing that, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on Tejas. Both
Tejas Holding and Tejas have previously delivered or made available to
the Westech correct and complete copies of their respective
certificates of incorporation and bylaws as currently in effect.
(b) Equity Capitalization and Subsidiaries: The only
subsidiary of Tejas Holding is Tejas. Tejas has no subsidiaries. The
Tejas Schedule of Exceptions sets forth (i) the equity capitalization
of Tejas Holding, including the total number of authorized and issued
shares of equity securities (the "Holding Securities") as of the date
hereof, including the total number of Holding Securities subject to
options, warrants or any similar rights; and (ii) the equity
capitalization of Tejas, including the total number of authorized and
issued shares of equity securities (the "Tejas Securities") as of the
date hereof, including the total number of Tejas Securities subject to
options, warrants or any similar rights. There are no issued and
outstanding securities of any nature convertible into Holding
Securities or Tejas Securities, or any commitments to issue any such
securities. All issued
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and outstanding shares of Holding Securities and Tejas Securities have
been duly authorized, are validly issued, fully paid and
non-assessable, and were issued in full compliance with all applicable
federal and state securities laws. There are no preemptive rights in
existence in connection with the outstanding Holding Securities or
Tejas Securities.
(c) Business: Neither Tejas Holding nor Tejas are a party to
any contract which restricts the freedom of either to carry on the
business as it is now being conducted.
(d) Authorization; Binding Agreement: Tejas Holding has the
full corporate power and authority to execute and deliver this
Agreement and, subject to the approval of its stockholders, to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized, executed and
delivered by the Board of Directors of Tejas Holding and, prior to the
Closing, by its stockholders and, assuming the Agreement has been duly
and validly executed by each of Westech and the Merger Sub, will
constitute the legal, valid and binding agreement of Tejas Holding and
Tejas, enforceable against them in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium, and
similar laws affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is sought in a
proceeding at law or in equity.
(e) Noncontravention: Neither the execution and delivery of
this Agreement nor the consummation and performance of the transactions
contemplated hereby, or the compliance with the terms of this
Agreement, will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or bylaws of Tejas
Holding, (ii) require any consent, approval or notice under, or
conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration)
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under, any of the terms, conditions or provisions of any loan or credit
agreement, note, bond, mortgage, indenture, license, agreement or other
instrument or obligation (collectively, "Contracts or Other
Agreements") to which Tejas Holding or Tejas is a party the failure to
obtain consent or approval or to give notice under which, or the
conflict with or violation of, breach of or default under, would,
individually or in the aggregate, have a material adverse effect on
Tejas Holding or Tejas, or (iii) violate any order, judgment, writ,
injunction, determination, award, decree, law, statute, rule or
regulation (collectively, "Legal Requirements") applicable to Tejas
Holding, Tejas or their properties or assets the violation of which,
individually or in the aggregate, would have a material adverse effect
on Tejas Holding or Tejas.
(f) Governmental Approvals: No consent, approval or
authorization of or declaration or filing with any foreign, federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality (each, a "Governmental Entity") on
the part of Tejas Holding or Tejas is required in connection with the
execution or delivery by Tejas Holding of this Agreement or the
consummation by Tejas Holding of the transactions contemplated hereby,
other than (i) consents, approvals, authorizations, declarations or
filings with the National Association of Securities Dealers ("NASD")
and all other states, stock exchanges, options exchanges, boards of
options, clearinghouses and other regulatory, self-regulatory and trade
agencies, boards, commissions, organizations, departments and entities
(the "Regulatory Agencies") of which Tejas is a member or is otherwise
subject, (ii) consents, approvals, authorizations, declarations or
filings with respect to the Investment Advisers Act of 1940, as
amended, and (iii) the filing of a Certificate of Merger with the
Secretary of State of the State of Delaware and the filing of Articles
of Merger with the Secretary of State of the State of Texas.
(g) Consents: Other than as set forth on the Tejas Schedule of
Exceptions in
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response to Section 2(i), and except for the consent and approval of
the Board of Directors and stockholders of Tejas Holding and the Board
of Directors and stockholder of Merger Sub, no consents or approvals
of, or filings or registrations with, any third party or any public
body or authority are necessary in connection with (i) the execution
and delivery by Tejas Holding of this Agreement and (ii) the
consummation by Tejas Holding of the Merger and by Tejas Holding of all
other transactions contemplated hereby.
(h) Adverse Actions: There are, and as of the Closing there
will be, no legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature,
challenging the validity or propriety of the transactions contemplated
by this Agreement and, to the best knowledge of Tejas Holding and
Tejas, there is no reasonable basis for any such proceeding, claim,
action or governmental investigation for any reason whatsoever. Neither
Tejas Holding nor Tejas are a party to any order, judgment or decree
which will, or might reasonably be expected to, materially adversely
affect the business, operations, properties, assets or financial
condition of Tejas Holding or Tejas.
(i) Financial Statements: Absence of Undisclosed Liabilities
or Material Adverse Change:
(i) Tejas has previously furnished to Westech copies
of the audited balance sheet of Tejas as at December 31, 1998
and 1997 and the related statements of operations,
stockholders' equity and cash flows for the years then ended,
including the footnotes thereto (the "Audited Financial
Statements"), certified by KPMG, independent certified public
accountants, and Tejas' most recent unaudited balance sheet as
at June 30, 1999 and the related statements of operations,
stockholders' equity and cash flows for the six months then
ended (the "Interim Financial Statements"). The Audited
Financial Statements and the Interim
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Financial Statements have been prepared in conformity with
generally accepted accounting principles consistently applied
throughout the periods involved and present fairly the
financial position and results of operations of Tejas on and
as of the dates and for the periods therein indicated,
subject, in the case of the Interim Financial Statements, to
normal year-end adjustments and the absence of footnotes. The
statements of operations do not contain any special or
nonrecurring items (as compared to the prior year) of income
or loss, except as expressly specified therein.
(ii) Except as incurred in connection with this
transaction, or to the extent reflected or reserved against in
the Interim Financial Statements or incurred since such date
in the ordinary course of business consistent with past
practice, Tejas has no direct or indirect material liabilities
of any nature whatsoever.
(iii) There has not been, and on the Closing Date
there will not have been, any material adverse change in the
financial condition of Tejas from that set forth in the Tejas
Financial Statements except for the transactions relating to
this Agreement.
(j) Absence of Certain Changes or Events: Since June 30, 1999,
Tejas has conducted its business in the ordinary course consistent with
past practice and there has not been any condition, event or occurrence
that, individually or in the aggregate, has resulted, or could
reasonably be expected to result, in a material adverse effect with
respect to Tejas (excluding however, the transactions contemplated by
this Agreement and changes in conditions generally applicable to the
industries in which Tejas is involved and general economic conditions).
(k) Absence of Litigation. As of the date hereof there are no
claims, actions, proceedings, investigations or audits pending or, to
the knowledge of Tejas Holding or
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Tejas, threatened against Tejas Holding or Tejas on the date hereof
before any court or Governmental Entity or Regulatory Agency. As of the
date hereof, neither Tejas Holding nor Tejas are subject to any order,
judgment, injunction or decree (collectively, "Orders") of any court,
Governmental Entity or Regulatory Agency.
(l) Compliance: Tejas is not in default or violation of any
term, condition or provision of its certificate of incorporation or
bylaws, or any Legal Requirements applicable to Tejas, or of any
material contract, the default or violation of which would have a
material adverse effect on Tejas.
(m) ERISA and Employee Benefit Matters:
(i) Neither Tejas nor any ERISA Affiliate
(as defined below) maintains any Employee Benefit
Plan. As used in this Agreement, "Employee Benefit
Plan" shall mean any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"),
and any other material plan, policy, program,
practice, agreement, understanding or arrangement
(whether written or unwritten) providing compensation
or other benefits to any current or former director,
officer, employee or consultant (or to any dependent
or beneficiary thereof), of Tejas or any ERISA
Affiliate which are now, or were within the past six
(6) years, maintained by Tejas or any ERISA Affiliate
or under which Tejas or any ERISA Affiliate has or
could have any obligation or liability, whether
actual or contingent (and including, without
limitation, any liability arising out of an
indemnification, guarantee, hold harmless or similar
agreement), including, without limitation, all
incentive, bonus, deferred compensation, vacation,
holiday, cafeteria, medical, disability, stock
purchase, stock option, stock appreciation,
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phantom stock, restricted stock or other stock-based
compensation plans, policies, programs, practices or
arrangements. As used in this Agreement, "ERISA
Affiliate" shall mean any entity (whether or not
incorporated) other than Tejas that, together with
Tejas, is or was a member of (A) a controlled group
of corporations within the meaning of Section 414(b)
of the Code, (B) a group of trades or businesses
under common control within the meaning of Section
414(c) of the Code or (C) an affiliated service group
within the meaning of Section 414(m) of the Code.
(ii) Neither Tejas nor any ERISA Affiliate
maintains or has ever maintained, contributed to or
had an obligation to contribute to, or could have any
obligation in respect of, an Employee Benefit Plan
subject to Title IV of ERISA or to Section 412 of the
Code. Neither Tejas nor any ERISA Affiliate has ever
contributed to, or withdrawn in a partial or complete
withdrawal from, any "multiemployer plan" (as defined
in Section 3(37) of ERISA) or has any fixed or
contingent liability under Section 4204 of ERISA. No
Employee Benefit Plan is a "multiple employer plan"
as described in Section 3(40) of ERISA or Section
413(c) of the Code.
(iii) With respect to each Employee Benefit
Plan, (A) no party in interest or disqualified person
(as defined in Section 3(14) of ERISA and Section
4975 of the Code, respectively) has at any time
engaged in a transaction which could subject Westech,
the Merger Sub, Tejas Holding or Tejas, directly or
indirectly, to a tax, penalty or liability for
prohibited transactions imposed by ERISA or the Code
and (B) no fiduciary (as defined in Section 3(21) of
ERISA) with respect to any Employee Benefit Plan, or
for whose conduct Tejas could have any liability (by
reason of
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indemnities or otherwise), has breached any of the
responsibilities or obligations imposed upon the
fiduciary under Title I of ERISA.
(iv) Neither Tejas nor any ERISA affiliate
has engaged in or participated in any transaction,
whether or not related to an Employee Benefit Plan,
that could, directly or indirectly, result in any
tax, penalty or liability imposed by ERISA or the
Code including, without limitation, any excise tax
under Section 4975 of the Code or any civil penalty
under Section 409, 502(i) or 502(l) of ERISA.
(v) Tejas has neither received notice of nor
is aware of any actions, claims (other than routine
claims for benefits), lawsuits or arbitrations
pending or threatened with respect to any Employee
Benefit Plan or against any fiduciary of any Employee
Benefit Plan, and Tejas has no knowledge of any facts
that could give rise to any such actions, claims,
lawsuits or arbitrations. There has not occurred any
circumstances by reason of which Tejas may be liable
for an act, or a failure to act, by a fiduciary with
respect to any Employee Benefit Plan. No Employee
Benefit Plan is under audit or is the subject of an
audit or investigation by the IRS, the DOL, or any
other federal or state governmental agency, nor, to
Tejas Holding's or Tejas' knowledge, is any such
audit or investigation pending or threatened.
(vi) The consummation of the transactions
contemplated hereby, either alone or in combination
with another event, will not result in (A) any
payment (including, without limitation, severance,
unemployment compensation, golden parachute or bonus
payments or otherwise) becoming due to any director,
officer, employee or consultant of Tejas, (B)
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any increase in the amount of compensation or
benefits payable in respect of any director, officer,
employee or consultant of Tejas, or (C) acceleration
of the vesting or timing of payment of any benefits
or compensation payable in respect of any director,
officer, employee or consultant of Tejas. No Employee
Benefit Plan provides benefits or payments contingent
upon, triggered by, or increased as a result of a
change in the ownership or effective control of
Tejas.
(n) Environmental Matters. (i) Tejas is in compliance with all
applicable federal, state and local Legal Requirements relating to
pollution or protection of the environment (collectively,
"Environmental Laws"), (ii) there is no civil, criminal or
administrative Order, action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending
or, to Tejas' knowledge, threatened in writing on the date hereof
against Tejas pursuant to Environmental Laws and (iii) Tejas is not
otherwise subject to any current liabilities under Environmental Laws.
(o) Intangible Property; Software: Tejas owns or has a valid
license or otherwise has the right to use all patents, copyrights,
trademarks, service marks and trade names, including any registrations
or applications for registration of any of the foregoing, technology,
know-how, computer software programs and applications, and tangible or
intangible proprietary information or material (collectively,
"Intellectual Property") that are material to the operation of the
business of Tejas as presently conducted. To the knowledge of Tejas,
the use of the Intellectual Property by Tejas does not infringe upon or
otherwise violate any intellectual property rights of third parties. To
the knowledge of Tejas, no third party including, but not limited to,
any employee, former employee, independent contractor or consultant of
Tejas, is infringing upon or otherwise violating the rights of Tejas in
the Intellectual Property.
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(p) Labor Matters:
(i) Tejas is in compliance in all material respects
with all laws, agreements and contracts relating to the
employment of former, current, and prospective employees,
independent contractors and "leased employees" (within the
meaning of Section 414(n) of the Code) of Tejas, including all
such laws, agreements and contracts relating to wages, hours,
collective bargaining, employment discrimination, immigration,
disability, civil rights, fair labor standards, occupational
safety and health, workers' compensation, pay equity, wrongful
discharge and violation of the potential rights of such
former, current, and prospective employees, independent
contractors and leased employees, and it has timely prepared
and filed all appropriate forms (including Immigration and
Naturalization Service Form 1-9) required by any relevant
governmental authority.
(ii) No collective bargaining agreement with respect
to the business of Tejas is currently in effect or being
negotiated. Tejas has no obligation to negotiate any such
collective bargaining agreement, and Tejas has not been
advised that, or has any knowledge that, the employees of
Tejas desire to be covered by a collective bargaining
agreement.
(iii) There are no strikes, slowdowns or work
stoppages pending or, to the best knowledge of Tejas,
threatened with respect to the employees of Tejas, nor has any
such strike, slowdown or work stoppage occurred or, to the
best knowledge of Tejas, been threatened since January 1,
1999. There is no representation claim or petition pending
before the National Labor Relations Board or any state or
local labor agency, and, to the best knowledge of Tejas, no
question concerning representation has been raised or
threatened since January 1, 1998 respecting the employees of
Tejas.
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<PAGE> 16
(iv) There are no complaints or charges against Tejas
pending before the National Labor Relations Board or any state
or local labor agency, and, to the best knowledge of Tejas, no
person has threatened since January 1, 1999 to file any
complaint or charge against Tejas with any such board or
agency.
(v) To the best knowledge of Tejas, no charges with
respect to or relating to the business of Tejas or any
affiliate thereof are pending before the Equal Employment
Opportunity Commission or any state or local agency
responsible for the prevention of unlawful employment
practices.
(q) Real Property. Tejas does not own any real property.
(r) Books and Records. All constituent documents, business
licenses, minute books, stock certificate books, stock transfer ledgers
and other records of Tejas (collectively, the "Records") have been
maintained in accordance with sound business practices and Legal
Requirements applicable to Tejas. The Records are complete and accurate
in all material respects and contain all material matters required to
be dealt with in such Records.
(s) Finders and Investment Bankers: Neither Tejas Holding nor
Tejas or any of their respective officers or directors have employed
any investment banker, financial advisor, broker or finder in
connection with the transactions contemplated by this Agreement or
incurred any liability for any investment banking, business
consultancy, financial advisory, brokerage or finders' fees or
commissions in connection with the transactions contemplated hereby,
except for fees payable to Gro-Vest Management Consultants Inc., whose
$150,000 fee will be paid by Westech within five business days after
the Westech's Common Stock is approved for trading on NASDAQ's small
capitalization market; provided, however, that any Westech liability,
whether contingent or actual, known or unknown, in existence on the
date of the Merger (other than the fees
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<PAGE> 17
recited herein as payable to Gro-Vest) shall be deducted from the fee
payable to Gro-Vest Management Consultants, Inc.
(t) Transactions with Certain Persons: Since January 1, 1999
neither Tejas Holding nor Tejas have, except on an arm's-length basis,
directly or indirectly, purchased, leased or otherwise acquired any
assets or properties or obtained any services from, or sold, leased or
otherwise disposed of any assets or properties or furnished any
services to, or otherwise dealt with (except with respect to
remuneration for services rendered as a director, officer or employee
of Tejas), any person which, directly or indirectly, alone or together
with others, controls, is controlled by or is under common control with
Tejas.
(u) Tejas Holding: Tejas Holding has been organized solely for
the purpose of consummating the Merger and, since its inception and
until the Closing Date, Tejas Holding has had and will have no business
activity of any nature other than those related to its organization or
as contemplated by this Agreement.
(v) Y2K: Tejas is in material compliance with all NASD
requirements relating to computer and software readiness with respect
to the Y2K issue.
(w) Disclosure: The representations and warranties by Tejas
Holding and Tejas contained in this Agreement do not contain any untrue
statement of a material fact, and do not omit to state any material
fact required to be stated herein or necessary in order to make the
statements herein, in light of the circumstances under which they were
made, not misleading.
3. Representations and Warranties of Merger Sub and Kaplan. Merger Sub
and Kaplan represent and warrant, jointly and severally, to Tejas Holding and
Tejas as follows:
(a) Organization: Merger Sub is, and on the Closing Date will
be, a duly organized and validly existing corporation in good standing
under the laws of the State of Delaware, authorized to issue 100 shares
of common stock, par value $.01 per share (the
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"Merger Sub Shares"). As of the Closing Date and immediately prior to
consummation of the Merger there will be issued and outstanding all of
the Merger Sub Shares which shall be fully paid and nonassessable and
which shall be owned by Westech. There are no, and on the Closing Date
there will be no, issued or outstanding options or warrants to purchase
Merger Sub Shares or any issued or outstanding securities of any nature
convertible into Merger Sub Shares nor are there nor will there be any
commitments to issue any such options or warrants or convertible
securities.
(b) Activity: Merger Sub has been organized solely for the
purpose of consummating the Merger and, since its inception and until
the Closing Date, Merger Sub has had and will have no business activity
of any nature other than those related to its organization or as
contemplated by this Agreement.
(c) Authority: Merger Sub has, and as of the Closing Date will
have, full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
transactions contemplated hereby have been duly approved by the Board
of Directors of Merger Sub and by its sole stockholder, Westech.
(d) Consents: Except for the approval of the Board of
Directors and stockholder of Merger Sub, which have heretofore been
obtained, and the Board of Directors and stockholders of Tejas Holding,
and the filing of the Certificate and Articles of Merger, no consents
or approvals of, or filings or registrations with, any third party or
any public body or authority are necessary in connection with (i) the
execution and delivery by Merger Sub of this Agreement and (ii) the
consummation by Merger Sub of the Merger and the other transactions
contemplated hereby.
(e) Noncontravention: The execution and delivery by Merger Sub
of this Agreement, the consummation and performance of the transactions
herein contemplated,
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<PAGE> 19
and compliance with the terms of this Agreement by Merger Sub will not
conflict with, result in a breach of or constitute a default under any
indenture, mortgage, deed of trust or other agreement, instrument or
contract to which Merger Sub is now a party or by which it or any of
its assets or properties is bound or the Certificate of Incorporation,
as amended, or the bylaws of Merger Sub, in each case as amended, or
any law, order, rule or regulation, writ, injunction, judgment or
decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over Merger Sub or any of its
business or properties.
(f) Liabilities: There are, and as of the Closing Date there
will be, no liabilities (including, but not limited to tax liabilities)
or claims against Merger Sub whether such liabilities or claims are
contingent or absolute, direct or indirect, matured or unmatured, known
or unknown other than reasonable organizational expense of Merger Sub
which shall be the obligation of Westech.
4. Representations and Warranties of Westech and Kaplan. Westech and
Kaplan represent and warrant, jointly and severally, to Tejas Holding and Tejas,
as follows:
(a) Organization: Westech is, and on the Closing Date will be,
a duly organized and validly existing corporation and on the Closing
Date Westech will be in good standing under the laws of the State of
New York.
(b) Equity Capitalization and Subsidiaries: Westech is
authorized to issue an aggregate of 50,000,000 shares of Westech Common
Stock. As of the Closing and after giving effect to the Stock Split
(but not to the Merger) there will be issued and outstanding no more
than 600,000 shares of Westech Common Stock, all of which issued and
outstanding shares will be fully paid and nonassessable. Exhibit C
attached hereto contains a current listing of all stockholders of
record of Westech Common Stock and the amount of such stock owned by
each and the amount of Westech Common Stock to be
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<PAGE> 20
owned immediately following the Stock Split. Except as contemplated by
this Agreement, there are no, and on the Closing Date there will be no,
issued or outstanding options, warrants or other rights, contingent or
otherwise, to purchase or acquire shares of Westech Common Stock or any
issued or outstanding securities of any nature convertible into shares
of Westech Common Stock, or any outstanding commitments to issue such
options, warrants or other rights or such contingent securities. The
outstanding shares of Westech Common Stock have all been issued in full
compliance with, or pursuant to an appropriate exemption from, the
registration requirements of the Securities Act of 1933 (the
"Securities Act") and any applicable registration requirements of the
various states. The holders of shares of Westech Common Stock are not
and as of the Closing Date will not be entitled to any preemptive
rights, rights of first refusal, rights of first offer or other similar
right or privilege. Other than Merger Sub, Westech has no subsidiaries.
(c) Activities: Since its formation in July of 1990, the
business of Westech has been limited to the search for an acquisition
or merger partner and certain transactions described in its filings
with the Securities and Exchange Commission (the "SEC Filings") and,
except for transactions related thereto or related to its status as a
publicly held company, it has not engaged in any other business or
activity since July 1990.
(d) Qualification to do Business: The business of Westech does
not require it to be registered as an investment company or investment
advisor, as such terms are defined under the Investment Company Act and
the Investment Advisors Act of 1940, nor does the business of Westech
require it to be qualified or licensed to transact business as a
foreign corporation in any jurisdiction.
(e) Financial Statements: The financial statements of Westech,
consisting of its Balance Sheets as at June 30, 1999 and 1998, and its
related Statement of Operations, Statement of Stockholders' Equity, and
its Statements of Cash Flows for the fiscal years
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<PAGE> 21
ended June 30, 1999, 1998 and 1997 (collectively, the "Westech
Financial Statements"), have been prepared in conformity with generally
accepted accounting principles consistently applied throughout the
periods involved and have been audited by Scott & Guilfoyle,
independent public accountants. Westech Financial Statements have been
delivered to Tejas Holding and Tejas.
(f) No Financial Changes: There has not been, and on the
Closing Date there will not have been, any material change in the
financial condition of Westech from that set forth in the Westech
Financial Statements except for transactions relating to this
Agreement, and the incurring of expenses and liabilities relating to
this Agreement.
(g) Liabilities: There are, and on the Closing Date there will
be, no liabilities (including, but not limited to, tax liabilities) or
claims against Westech (whether such liabilities or claims are
contingent or absolute, direct or indirect, matured or unmatured, known
or unknown) not appearing on the Westech Financial Statements, except
for liabilities for expenses incurred relating to this Agreement and
the consummation of the transactions contemplated hereby.
(h) Contracts, Etc.: Other than this Agreement and Plan of
Merger, there are no contracts, arrangements, understandings and
commitments, whether written or oral, to which Westech or Merger Sub
is, or as of the Closing Date will be, a party, or from which Westech
or Merger Sub will receive substantial benefits or be subjected to
substantial liabilities and which are material to Westech.
(i) Taxes: All federal, state, county and local income,
excise, property or other tax returns required to be filed by Westech
have been filed and all required taxes, fees or assessments have been
paid or an adequate reserve therefor has been set up and is reflected
in the Westech Financial Statements.
(j) FF&E: Westech has, and as of the Closing Date will have,
no fixtures,
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furniture, equipment, inventory or accounts receivable.
(k) Adverse Actions: There are, and on the Closing Date there
will be, no legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against
Westech, or challenging the validity or propriety of the transactions
contemplated by this Agreement and, to Westech's and Kaplan's best
knowledge, there is no reasonable basis for any proceeding, claim,
action or governmental investigation either against Westech or
involving the transactions contemplated by this Agreement, nor has any
such action been threatened by any party. Westech is not a party to any
order, judgment or decree which will, or might reasonably be expected
to, materially adversely affect the business, operations, properties,
assets or financial condition of Westech.
(l) Employees: Since January 1, 1998, there have been, and to
the Closing Date there will be (i) no salaried or otherwise compensated
employees and no bonuses paid to any officer or director of Westech,
(ii) no dividends or other distributions declared or paid by Westech,
and (iii) no purchase by Westech of any of its securities.
(m) Additional Shares: Since January 1, 1999, Westech has not
issued or committed itself to issue, and to the Closing Date will not
issue or commit itself to issue, any additional shares of Westech
Common Stock or any options, rights, warrants, or other securities
convertible into shares of Westech Common Stock, except as contemplated
by this Agreement.
(n) Intellectual Property: Westech has, and as of the Closing
Date will have, no patents, patent applications, trademarks, trademark
registrations or applications, trade names, copyrights, copyright
registrations or applications, or other intellectual property.
(o) Compliance: Since its inception, Westech has, and as of
the Closing Date will have operated its business and conducted its
affairs in compliance with all applicable
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<PAGE> 23
laws, rules and regulations.
(p) Contracts: There are, and as of the Closing Date there
will be, no loans, leases or other Contracts outstanding between
Westech and any officer or manager of Westech, or any person related to
or affiliated with any officer or manager of Westech or Kaplan.
(q) "Bad Events": During the past five-year period neither
Westech nor any officer or manager of Westech, or any successor entity
or subsidiary, or Kaplan has:
(i) been suspended or expelled from membership in any
securities or commodities exchange, association of securities
or commodities dealers or investment advisors;
(ii) had a license or registration as a dealer,
broker, investment advisor or salesman, futures commission
merchant, associated person, commodity pool operator, or
commodity trading advisor denied, suspended or revoked;
(iii) been enjoined or restrained by any court or
government agency from:
(A) the issuance, sale or offer for
sale of securities or commodities;
(B) rendering securities or commodities
advice;
(C) handling or managing trading
accounts;
(D) continuing any practices in
connection with securities or
commodities;
(iv) been convicted of any crime (other than minor
traffic);
(v) used or been known by any other name;
(vi) been the subject of any professional
disciplinary proceeding; or
(vii) been adjudged a bankrupt or made a general
assignment for benefit
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<PAGE> 24
of creditors; or been an officer, director or principal of any
entity which was reorganized in bankruptcy, adjudged a
bankrupt or made a general assignment for benefit of
creditors.
All items described in clauses (i) through (vii)
above are collectively referred to herein as "Bad Events."
(r) Employee Benefit Plans: Westech has no pension plan,
profit sharing or similar employee benefit plan.
(s) Approvals: Except for the approval of the Board of
Directors and stockholder of Merger Sub, which has heretofore occurred,
and the Board of Directors and stockholders of Tejas Holding, and the
filing of Certificate and Articles of Merger, no consents or approvals
of, or filings or registrations with, any third party or any public
body or authority are necessary in connection with (i) the execution
and delivery by Westech of this Agreement and (ii) the consummation of
the Stock Split and the Merger and the other transactions contemplated
hereby. Westech has, and on the Closing Date will have, full power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the transactions
contemplated hereby have been duly approved by the Board of Directors
of Westech.
(t) Finders and Investment Bankers: Neither Westech nor Merger
Sub know of any person who rendered any service in connection with the
introduction of Westech, Merger Sub, Tejas Holding or Tejas to each
other, and that it knows of no claim by anyone for a "finder's fee" or
similar type of fee in connection with the Merger and the other
transactions contemplated hereby, except for fees payable to Gro-Vest
Management Consultants Inc. as set forth herein.
(u) Employees: Neither Westech nor Merger Sub have any
employees.
(v) Disclosure: None of the information supplied or to be
supplied by or about
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<PAGE> 25
Westech or Merger Sub to Tejas Holding or Tejas concerning Westech or
Merger Sub or any of their officers, directors or affiliates contains
any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading.
(w) Authorization: The execution and delivery by Westech and
Merger Sub of this Agreement, the consummation and performance of the
transactions herein contemplated, and compliance with the terms of this
Agreement by Westech and Merger Sub will not conflict with, result in a
breach of or constitute a default under (i) any contracts or other
agreements to which Westech or Merger Sub is now a party or by which it
or any of their respective assets or properties is bound; (ii) the
Certificate of Incorporation, as amended, or the bylaws of Westech or
Merger Sub; or (iii) any Legal Requirement applicable to Westech or
Merger Sub or any of their respective business or properties.
(x) SEC Filings: Westech's SEC Filings neither contained any
untrue material fact nor omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(y) Foreign Corrupt Practices Act: Westech has not violated
the Foreign Corrupt Practices Act.
5. Representations to Survive Closing. All of the representations and
warranties contained in this Agreement (including all statements contained in
any certificate or other instrument delivered by or on behalf of Westech, Merger
Sub, Kaplan, Tejas Holding, or Tejas pursuant hereto or in connection with the
transactions contemplated hereby) shall survive the Closing for one year.
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<PAGE> 26
6. Surviving Corporation. The surviving corporation shall be Tejas
Holding. Its name, identity, certificate of incorporation, bylaws, existence,
purposes, powers, objects, franchises, rights and immunities shall be unaffected
and unimpaired by the Merger, except as described in the Certificate of Merger.
7. Treatment of Shares of Constituent Corporations. The terms and
conditions of the Merger, the mode of carrying the same into effect, and the
manner and basis of converting the securities of each of the Constituent
Corporations are as follows:
(a) The Tejas Holding Common Stock shall be converted by
virtue of the Merger into a total of 14,400,000 Westech Common Shares,
on the basis of one Westech Common Share for each one share of Tejas
Holding Common Stock outstanding on the Closing without any action on
the part of the holders thereof. After the Merger, each holder of a
Tejas Holding Common Stock prior to the Merger shall be entitled upon
surrender to receive from Westech a certificate representing the number
of Westech Common Shares to which such holder shall be entitled, which
certificate shall contain an appropriate legend restricting the resale
of such Westech Common Shares. Until so surrendered, any outstanding
certificates or other documentation which, prior to the Merger,
represented a Tejas Holding Common Stock shall be deemed for all
corporate purposes to evidence ownership of the Westech Common Shares
into which such Tejas Holding Common Stock shall have been converted.
Upon such surrender, the Tejas Holding Common Stock so surrendered
shall no longer be outstanding and shall automatically be canceled and
retired, and shall cease to exist.
(b) The separate existence and corporate organization of
Merger Sub, except insofar as it may be continued by statute, shall
cease on the Merger and Tejas Holding shall become a wholly owned
subsidiary of Westech.
8. Rights and Liabilities of Surviving Corporation. On and after the
Merger, Tejas
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<PAGE> 27
Holding, as the surviving corporation, shall succeed to and possess, without
further act or deed, all of the estate, rights, privileges, powers and
franchises, both public and private, and all of the property, real, personal,
and mixed, of each of the Constituent Corporations; all debts due to either of
the Constituent Corporations on whatever account shall be vested in Tejas
Holding; all claims, demands, property, rights, privileges, powers, franchises
and every other interest of either of the Constituent Corporations shall be as
effectively the property of Tejas Holding as they were of the respective
Constituent Corporations; the title to any real estate by deed or otherwise in
either of the Constituent Corporations shall not revert or be in any way
impaired by reason of the Merger, but shall be vested in Tejas Holding; all
rights of creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, limited in lien to the property
affected by such lien at the Merger; and all debts, liabilities, and duties of
the respective Constituent Corporations shall thenceforth attach to Tejas
Holding and may be enforced against it to the same extent as if such debts,
liabilities, and duties had been incurred or contracted by it.
9. Further Assurances of Title. As and when requested by Tejas Holding
or by its successors or assigns, Westech or Merger Sub shall execute and
deliver, or cause to be executed and delivered, all such deeds and instruments
and will take or cause to be taken all such further action as Tejas Holding may
deem necessary or desirable in order to vest in and confirm to Tejas Holding
title to and possession of its property acquired by Tejas Holding by reason or
as a result of the Merger, and otherwise to carry out the intent and purposes
hereof, and the officers and directors of Merger Sub and Westech are fully
authorized in the name of Merger Sub or Westech or otherwise to take any and all
such action.
10. Conditions of Obligations of Merger Sub and Westech. The obligation
of Merger Sub and Westech to consummate the Merger is subject to the following
conditions prior to the Closing:
(a) That no material adverse change shall have occurred in the
financial
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condition of Tejas since June 30, 1999 or in Tejas Holding since its
incorporation.
(b) That Tejas Holding and Tejas shall have performed and
complied with the provisions and conditions of this Agreement on its
part to be performed and complied with, and that the representations
and warranties made by Tejas Holding and Tejas in this Agreement are
true and correct, both when made and as of the Closing Date.
(c) That this Agreement and the transactions contemplated
hereby shall have been approved by appropriate corporate action of
Tejas Holding and that resolutions to that effect have been delivered
to Westech.
(d) That Westech shall have received an opinion from counsel
to Tejas Holding in form satisfactory to Westech's counsel, that:
(i) Tejas Holding and Tejas have each been duly
organized and are validly existing corporations in good
standing under the laws of the State of Texas with full power
and authority to own and operate their respective properties
and to carry on their current and proposed businesses.
(ii) This Agreement has been duly authorized,
executed and delivered by Tejas Holding and Tejas and is a
valid and binding obligation of Tejas Holding and Tejas,
legally enforceable against Tejas Holding and Tejas in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting
creditors' rights now or hereafter in effect, and to general
equitable principles.
(iii) Upon consummation of the Merger, Westech will
be the sole owner of all of the Tejas Holding Common Stock.
(e) Westech shall have received completed copies of the
Subscription Agreement and related Investor Questionnaire attached
hereto as Exhibit D from each stockholder of Tejas Holding representing
that each such stockholder is an Accredited Investor under the
Securities Act of 1933, as amended.
Compliance with the provisions of this paragraph shall be evidenced by
the certificate of the President and Secretary of Tejas.
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11. Conditions of Obligations of Tejas. The obligations of Tejas
Holding and Tejas to consummate the Merger are subject to the following
conditions prior to the Closing:
(a) That no material adverse change shall have occurred in the
financial condition of Westech since June 30, 1999 and no material
adverse change shall have occurred in the financial condition of Merger
Sub since its formation.
(b) That no material transactions shall have been entered into
by Merger Sub or Westech since June 30, 1999, other than as referred to
in this Agreement, except with the prior written consent of Tejas.
(c) That none of the properties or assets of Merger Sub or
Westech shall have been sold or otherwise disposed of since June 30,
1999, except with the written consent of Tejas.
(d) That Merger Sub, Westech and Kaplan shall each have
performed and complied with the provisions and conditions of this
Agreement on its part to be performed and complied with, and that the
representations and warranties made by Merger Sub, Westech and Kaplan
herein are true and correct.
(e) That Westech shall have held a meeting of its Board of
Directors at which meeting all of its directors shall have resigned
seriatim subject to the consummation of the Merger.
(f) That Tejas Holding and Tejas shall have received an
opinion from counsel to Merger Sub and Westech in form satisfactory to
Tejas Holding's counsel, that:
(i) Westech has been duly incorporated and is a
validly existing corporation in good standing under the laws
of the State of New York with full corporate power and
authority to own and operate its properties and to carry on
its current business.
(ii) Merger Sub has been duly incorporated and is a
validly existing corporation in good standing under the laws
of the State of Delaware with full corporate power and
authority to own and operate its properties and to carry on
its current business.
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<PAGE> 30
(iii) All of the issued and outstanding Westech
Common Shares, as well as all issued and outstanding Merger
Sub Shares, have been, and, immediately after the
effectiveness of the Merger will be, duly authorized and
validly issued, represent fully paid and nonassessable Westech
Common Shares or Merger Sub Shares, as applicable, and do not
have any preemptive rights applicable thereto.
(iv) This Agreement and the transactions contemplated
hereby have been duly authorized by appropriate corporate
action of both Merger Sub and Westech and no shareholder of
either Merger Sub or Westech is entitled to appraisal rights
with respect to the Merger contemplated by this Agreement.
(v) Neither the execution, delivery or performance of
this Agreement nor the consummation of the transactions herein
contemplated, nor compliance with the terms hereof by Westech
or Merger Sub do or will conflict with or result in a breach
of any of the terms or provisions of, or constitute a default
under, the articles of organization or the bylaws of Westech
or Merger Sub, any indenture, mortgage, deed of trust or other
contract, agreement or instrument to which such counsel knows,
after due inquiry, Westech or Merger Sub is a party or by
which, to the knowledge of such counsel after due inquiry,
Westech or Merger Sub or any of their respective assets or
properties is bound, or to the knowledge of such counsel after
due inquiry, any law, order, rule or regulation, judgment,
writ, injunction or decree of any government, governmental
instrumentality or court, domestic or foreign, having
jurisdiction over Westech or Merger Sub or their respective
business or any of their respective properties; and no further
consent, approvals, authorizations or orders of agencies,
officers or other regulatory authorities are necessary for the
consummation of the Merger.
(vi) Upon filing of the Certificate of Merger, in
substantially the form of Exhibit A annexed hereto, with the
Secretary of State of Delaware, the Merger shall be effective
under Delaware General Corporation Law. The Stock Split has
been duly authorized by appropriate corporate action of
Westech and, when carried out in the manner set forth in this
Agreement, the Westech Common Shares to be issued pursuant
thereto will be duly authorized and validly issued, represent
fully paid and nonassessable Westech Common Shares, and will
not have any preemptive rights applicable thereto.
Such counsel shall also state, if accurate, that such counsel
has participated in conferences with officers and other representatives
of Westech and representatives of the independent auditors for Westech
at which the contents of the documents related to the
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<PAGE> 31
sale of 40,000 shares of Westech Common Stock, on December 11, 1998,
March 2, 1998 and July 9, 1997 (collectively, the "Private
Placements"), the Merger and related matters were discussed and,
although such counsel does not pass upon, and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in such documents, such counsel advises Tejas
Holding and Tejas that, on the basis of the foregoing (relying as to
materiality to a large extent upon the opinions of officers and other
representatives of Westech), no facts have come to the attention of
such counsel which lead such counsel to believe that the documents
related to the Private Placements or the Merger, when such documents
were first circulated or as of the Closing Date, respectively,
contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact required to be stated therein or
necessary to make the statements therein (in light of the circumstances
under which they were or are being made) not misleading (it being
understood that such counsel has not been requested to and does not
make any comment with respect to the Audited Financial Statements and
the notes thereto and related schedules, and other financial or
statistical data found in or derivable from the financial or internal
records of Westech and any forward-looking or projected financial or
statistical data relating to Westech included in the documents related
to the Private Placements).
(g) The stockholders of Tejas Holding shall have approved the
Merger.
Compliance with the provisions of this paragraph shall be evidenced by
the certificate of the President and Secretary of each of Merger Sub and Westech
to be delivered at the Closing.
12. Abandonment. This Agreement and the Merger may be abandoned (a) by
either of the Constituent Corporations, acting by its Board of Directors, at any
time prior to its adoption by the stockholders of such constituent corporation,
as provided by law, (b) by both of the Constituent Corporations, acting through
their respective Board of Directors, at any time in the
-31-
<PAGE> 32
event of the failure of any condition in favor of such entity as to which the
consummation of the Merger is subject, or (c) by the consent of all the
Companies, acting each by its Board of Directors, at any time after such
adoption by such stockholders and prior to the Merger. In the event of
abandonment of this Agreement, the same shall become wholly void and of no
effect, and there shall be no further liability or obligation hereunder on the
part of any of the Companies, their respective Board of Directors or any other
party to this Agreement.
13. Closing or Termination. In the event the Closing of this Agreement
shall not take place by September 15, 1999, then any party shall have the right
to terminate this Agreement, in which event no party shall have any further
right or obligation as against any other.
14. Delivery of Corporate Proceedings of Westech. At least three days
prior to the Closing, Westech shall deliver to Tejas Holding's counsel the
originals of all of the corporate proceedings of Westech, duly certified by its
Secretary.
15. Delivery of Corporate Proceedings of Merger Sub. At least three
days prior to the Closing, Merger Sub shall deliver to Tejas Holding's counsel
the originals of all of the corporate proceedings of Merger Sub, duly certified
by its Secretary.
16. Delivery of Company Proceedings of Tejas. At the Closing, Tejas
Holding shall deliver to Westech's counsel a copy of its company proceedings
relating to this Agreement or taken pursuant to the provisions of this
Agreement, duly certified by its Secretary.
17. Limitation of Liability. The representations and warranties made by
any party to this Agreement are intended to be relied upon only by the other
parties to this Agreement and by no other person. Nothing contained in this
Agreement shall be deemed to confer upon any person not a party to this
Agreement any third party beneficiary rights or any other rights of any nature
whatsoever. It is specifically agreed among the parties hereto that the maximum
amount of liability Tejas Holding may have collectively relating to this
Agreement, the Merger or any other transaction contemplated herein is the sum of
(i) Westech's expenses, including those of Merger
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<PAGE> 33
Sub, if any, and (ii) Westech's positive stockholders' equity as of the Closing
Date immediately prior to the effectiveness of the Merger, if any.
18. Further Instruments and Actions. Each party shall deliver such
further instruments and take such further action as may be reasonably requested
by any other in order to carry out the intent and purposes of this Agreement.
19. Governing Law. This Agreement is being delivered and is intended to
be performed in the State of Texas, and shall be construed and enforced in
accordance with the laws of such State without regard to conflicts of laws
thereof.
20. Notices. All notices or other communications to be sent by any
party to this Agreement to any other party to this Agreement shall be sent by
certified mail, nationwide overnight delivery service or by personal delivery or
nationwide overnight courier to the addresses hereinbefore designated, or such
other addresses as may hereafter be designated in writing by a party.
21. Binding Agreement. This Agreement represents the entire agreement
among the parties hereto with respect to the matters described herein and is
binding upon and shall inure to the benefit of the parties hereto and their
legal representatives, successors and permitted assigns. This Agreement may not
be assigned and, except as stated herein, may not be altered or amended except
in writing executed by the party to be charged.
22. Counterparts. This Agreement may be executed in counterparts, all
of which, when taken together, shall constitute the entire Agreement.
23. Severability. The provisions of this Agreement shall be severable,
so that the unenforceability, validity or legality of any one provision shall
not affect the enforceability, validity or legality of the remaining provisions
hereof.
24. Joint Drafting. This Agreement shall be deemed to have been drafted
jointly by the parties hereto, and no inference or interpretation against any
party shall be made solely by virtue
-33-
<PAGE> 34
of such party allegedly having been the draftsperson of this Agreement.
-34-
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have made and executed this
Agreement as of the day and year first above written.
TEJAS SECURITIES GROUP
HOLDING COMPANY,
a Texas corporation
By: /s/ Jay Van Ert
----------------------------------------
Jay Van Ert, President
TEJAS SECURITIES GROUP, INC.,
a Texas corporation
By: /s/ Jay Van Ert
----------------------------------------
Jay Van Ert, President
KAPLAN
/s/ Lawrence Kaplan
--------------------------------------------
Lawrence Kaplan
WESTECH CAPITAL CORP.,
a New York corporation
By: /s/ Neil Ragin
----------------------------------------
Neil Ragin, President
WESTECH MERGER SUB, INC.,
a Delaware corporation
By: /s/ Neil Ragin
----------------------------------------
Neil Ragin, President
-35-
<PAGE> 36
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Audited Financial Statements......................................................................................7
Bad Events.......................................................................................................22
Closing...........................................................................................................2
Closing Date......................................................................................................2
Code..............................................................................................................1
Companies.........................................................................................................1
Constituent Corporations..........................................................................................3
Contracts or Other Agreements.....................................................................................5
Employee Benefit Plan.............................................................................................9
Environmental Laws...............................................................................................12
ERISA.............................................................................................................9
ERISA Affiliate..................................................................................................10
Governmental Entity...............................................................................................5
Holding Securities................................................................................................4
Intellectual Property............................................................................................13
Interim Financial Statements......................................................................................7
Kaplan............................................................................................................1
Legal Requirements................................................................................................5
Merger............................................................................................................1
Merger Sub........................................................................................................1
Merger Sub Shares ...............................................................................................16
multiemployer plan...............................................................................................10
NASD..............................................................................................................6
Orders............................................................................................................8
Private Placements...............................................................................................31
Records..........................................................................................................15
Regulatory Agencies...............................................................................................6
SEC Filings......................................................................................................19
Securities Act...................................................................................................19
Stock Split.......................................................................................................1
Tejas.............................................................................................................1
Tejas Holding.....................................................................................................1
Tejas Schedule of Exceptions......................................................................................3
Westech...........................................................................................................1
Westech Common Shares.............................................................................................2
Westech Common Stock..............................................................................................1
</TABLE>
-36-
<PAGE> 37
EXHIBIT A
CERTIFICATE OF MERGER - DELAWARE
-37-
<PAGE> 38
CERTIFICATE OF MERGER
OF
WESTECH MERGER SUB, INC.
WITH AND INTO
TEJAS SECURITIES GROUP HOLDING COMPANY
The undersigned corporation does hereby certify:
FIRST: That an Agreement and Plan of Merger among Tejas Securities
Group Holding Company, a Texas corporation, and Westech Merger Sub, Inc., a
Delaware corporation, has been approved, adopted, certified, executed and
acknowledged by each of Tejas Securities Group Holding Company and Westech
Merger Sub, Inc. in accordance with the requirements of Section 252 of the
Delaware General Corporation Law (the "DGCL").
SECOND: That the name of the surviving corporation of the merger is
Tejas Securities Group Holding Company. The authorized capital stock of Tejas
Securities Group Holding Company is Six Million (6,000,000) shares of no par
value per share common stock.
THIRD: That the articles of incorporation of Tejas Securities Group
Holding Company shall be the articles of incorporation of the surviving
corporation without change.
FOURTH: That the executed Agreement and Plan of Merger are on file at
the offices of Texas Securities Group Holding Company, located at 1250 Capital
of Texas Highway, South, Building Two, Suite 500, Austin, Texas 78746.
FIFTH: That the Agreement and Plan of Merger will be furnished by Tejas
Securities Group Holding Company, on request and without cost, to any
stockholder of any constituent corporation.
SIXTH: That Tejas Securities Group Holding Company agrees that it may
be served with process in the State of Delaware in any proceeding for
enforcement of any obligation of Westech Merger Sub, Inc., as well as for
enforcement of any obligation of Tejas Securities Group Holding Company,
including any suit or other proceeding to enforce the right of any stockholder
as determined in appraisal proceedings pursuant to Section 262 of the DGCL, and
irrevocably appoints the Secretary of State of the State of Delaware as its
agent to accept service of process in any such suit or other proceedings. The
address to which a copy of such process shall be mailed by the Secretary of
State of the State of Delaware is 1250 Capital of Texas Highway, South, Building
Two, Suite 500, Austin, Texas 78746 until the surviving corporation shall have
hereafter designated in writing to said Secretary of State a different address
for such purpose.
<PAGE> 39
IN WITNESS WHEREOF, Tejas Securities Group Holding Company has caused
this Certificate of Merger to be signed by Jay Van Ert, its President, this ____
day of August, 1999.
SURVIVING CORPORATION:
TEJAS SECURITIES GROUP
HOLDING COMPANY
By: Jay Van Ert, President
<PAGE> 40
EXHIBIT B
ARTICLES OF MERGER - TEXAS
<PAGE> 41
ARTICLES OF MERGER
OF
WESTECH MERGER SUB, INC.
WITH AND INTO
TEJAS SECURITIES GROUP HOLDING COMPANY
Pursuant to the provisions of Article 5.04 of the Texas Business
Corporation Act (the "TBCA"), the undersigned corporations adopt the following
Articles of Merger for the purpose of effecting a merger of such corporations in
accordance with Article 5.01 of the TBCA:
ARTICLE I
An Agreement and Plan of Merger was approved and adopted in accordance
with the provisions of Article 5.03 of the TBCA providing for the combination of
Tejas Securities Group Holding Company, a Texas corporation, and Westech Merger
Sub, Inc., a Delaware corporation, and resulting in Tejas Securities Group
Holding Company being the surviving corporation.
ARTICLE II
Westech Capital Corp., a New York corporation, Westech Merger Sub,
Inc., a Delaware corporation, Lawrence Kaplan, an individual residing in the
State of New York, Tejas Securities Group Holding Company, a Texas corporation,
and Tejas Securities Group, Inc., a Texas corporation, are each a party to the
Agreement and Plan of Merger.
ARTICLE III
An executed copy of the Agreement and Plan of Merger is on file at the
principal place of business of Tejas Securities Group Holding Company, located
at 1250 Capital of Texas Highway, South, Building Two, Suite 500, Austin, Texas
78746, and a copy of the Agreement and Plan of Merger will be furnished by such
entity, on written request and without cost, to any shareholder of each domestic
corporation that is a party to the Agreement and Plan of Merger and to any
creditor or obligee of the parties to the merger at the time of the merger if
such obligation is then outstanding.
ARTICLE IV
No amendments to the articles of incorporation of Tejas Securities
Group Holding Company are to be effected by the merger.
ARTICLE V
As to each of the undersigned corporations, the number of shares
outstanding and entitled to vote on such Agreement and Plan of Merger, are as
follows:
<PAGE> 42
<TABLE>
<CAPTION>
Number of
Shares
Name of Corporation Outstanding
------------------- -----------
<S> <C>
Tejas Securities Group Holding Company 4,808,555
Westech Merger Sub, Inc. 100
</TABLE>
No shares of capital stock are entitled to vote as a class with respect to the
adoption of such Agreement and Plan of Merger.
ARTICLE VI
As to each of the undersigned corporations, the total number of shares
voted for and against such Agreement and Plan of Merger are as follows:
<TABLE>
<CAPTION>
Total Total
Name of Voted Voted
Corporation For Against
----------- --------- -------
<S> <C> <C>
Tejas Securities Group Holding
Company 4,808,555 -0-
Westech Merger Sub, Inc. 100 -0-
</TABLE>
ARTICLE VII
The Agreement and Plan of Merger and the performance of its terms were
duly authorized by all action on the part of the undersigned corporations
required by the laws under which each such corporation was incorporated or
organized and by each such corporation's constituent documents.
<PAGE> 43
IN WITNESS WHEREOF, the undersigned have executed these Articles of
Merger this _____ day of August, 1999.
TEJAS SECURITIES GROUP
HOLDING COMPANY,
a Texas corporation
By:
Jay Van Ert, President
WESTECH MERGER SUB, INC.,
a Delaware corporation
By:
Neil Ragin, President
<PAGE> 1
EXHIBIT 4.1
[LETTERHEAD]
September 7, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Westech Capital Corp.
File #33-37534-NY
Gentlemen:
We were previously the principal accountants of Westech Capital Corp. and, under
the date of August 5, 1999, we reported on the financial statements of Westech
Capital Corp. as of and for the years ended June 30, 1999 and 1998. On August
31, 1999, our appointment as principal accountant was terminated. We have read
Item 4 of the Form 8-K dated August 27, 1999 of Westech Capital Corp. and we
agree with the statements contained therein.
Very truly yours,
/s/ Scott & Guilfoyle
Scott & Guilfoyle
