EXHIBIT 10.1
AGREEMENT AND PLAN OF REORGANIZATION
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This Agreement and Plan of Reorganization is dated July 31,
2001, between Winco Petroleum Corporation, a Colorado corporation
("Parent"), and WNCO, Inc. F/k/a Winco Spin-Off Corporation, a
Colorado corporation ("Subsidiary").
WHEREAS, Parent is an independent energy company engaged primarily in
the acquisition, exploration, exploitation and production of crude oil and
natural gas, a current listing of its oil and gas production properties,
the contracts and a description of the assets related to such business is
attached hereto as EXHIBIT A; and
WHEREAS, Parent desires to separate its producing oil and gas
operations from the remaining assets of the Parent by transferring that
portion of its business and assets to the Subsidiary in accordance with the
terms of this Agreement (the "Spin Off");
WHEREAS, Parent holds 100 shares of Common Stock in Subsidiary, and is
the sole shareholder of Subsidiary;
WHEREAS, following the transfer of assets to Subsidiary, it is
anticipated that Parent will distribute its stock in Subsidiary to Parent's
shareholders, and immediately following such distribution, Parent will,
pursuant to a Merger Agreement dated for reference purposes August 18, 2000
(the "Merger Agreement"), acquire control of Business Products, Inc.
("BPI");
WHEREAS, the Parent, in order to induce the shareholders of BPI to
enter into the Merger Agreement has agreed to cause Subsidiary to assume
all liabilities and obligations of Parent and any and all tax liabilities
arising from the transfer of assets to Subsidiary and the subsequent
distribution of the stock in Subsidiary pursuant to this Agreement and Plan
of Reorganization. Subsidiary, in consideration of the transfer of the
assets described herein has agreed to assume such liabilities and indemnify
Parent therefrom;
WHEREAS, American Warrior, a Wisconsin corporation, ("American
Warrior") is an affiliate of Subsidiary, and Subsidiary has agreed to
cause American Warrior to indemnify Parent from losses of damages suffered
by Parent as further described herein;
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. TRANSFER OF ASSETS. On the date of this Agreement and Plan of
Reorganization, the Parent will convey, assign and transfer to the
Subsidiary any and all assets of Parent including all operating and other
assets from Parent's oil and gas operations, accounts receivables, trade
names, rights, claims and interests (the "Assets"). Without limitation,
said assets shall include those assets described in EXHIBIT A.
Notwithstanding the foregoing, Parent shall not transfer to Subsidiary
those assets described on EXHIBIT B (the "Excluded Assets").
2. CONSIDERATION. In consideration of the transfer of the Assets
in the Subsidiary hereby agrees (a) to assume, pay and perform any and all
debts, liabilities, leases, licenses, contracts and obligations of Parent
which have been incurred on or before the closing of the Merger
Agreement (the "Merger Closing"), including, without limitation those
described on EXHIBIT C attached hereto (the "Assumed Liabilities and
Obligations"; (b)(i) to assume and agree to pay any and all tax
liabilities as described in Section 8, and (ii) to issue 1,029,049
shares of common stock of Subsidiary to Parent.
3. DISTRIBUTION OF SUBSIDIARY STOCK. Upon completion of the
transfer of Assets and assumption of the Assumed Liabilities and
Obligations as described in Paragraphs 1 and 2 above, Parent will
distribute all of its stock in the Subsidiary to the then holders of
Parent's Common Stock with the shareholders of the Parent to receive one
share of Common Stock of the Subsidiary for each share of Common Stock of
the Parent it holds.
4. INDEMNIFICATION. At the Spin-Off Closing, Subsidiary shall
execute and deliver, and shall cause American Warrior to execute and
deliver, that Indemnification Agreement attached hereto as EXHIBIT D (the
"Indemnification Agreement").
5. CLOSING. The Spin-Off Closing will be at 10:00 A.M. on July 31,
2001 at the offices of Berenbaum Weinshienk, & Xxxxx, P.C. or such other
time and place mutually agreed to by the parties hereto (the "Spin Off
Closing"). At the Closing, the following deliveries shall take place:
(a) the Parent will deliver to the Subsidiary a Xxxx of Sale
and Assignment and, if necessary, a quit claim deed or
deeds assigning the Assets to the Subsidiary;
(b) the Parent will execute and deliver to the Subsidiary
specific assignments of certain Assets for which a
separate assignment is required or desirable;
(c) the Parent will deliver to the Subsidiary the amount of
the cash being transferred to the Subsidiary as a part of
the Assets;
(d) the Parent will deliver to the Subsidiary physical
possession of the tangible Assets;
(e) the Subsidiary will deliver to the Parent a stock
certificate for 1,029,049 shares of common stock of the
Subsidiary;
(f) the Subsidiary will execute and deliver to the Parent an
Assumption Agreement whereby the Subsidiary assumes and
agrees to pay and perform all Assumed Liabilities and
Obligations;
(g) the Subsidiary and American Warrior shall deliver to
Parent the Indemnification Agreement.
(h) the Parent or an agent of the Parent will distribute the
stock in the Subsidiary to the Parent's shareholders, in
a share for share basis.
6. REPRESENTATIONS AND WARRANTIES OF PARENT. The Parent hereby
represents and warrants to the Subsidiary as set forth below:
(a) CORPORATE STATUS. The Parent is duly incorporated under
the laws of the State of Colorado and is in good standing
under the laws of such State. Parent has taken all
requisite corporation action to authorize the
transactions provided for herein.
(b) ENFORCEABILITY. This Agreement and all other agreements
entered into pursuant hereto shall be fully enforceable
against Parent subject to the availability of equitable
remedies.
(c) ENCUMBRANCES. Upon the consummation of such transactions,
title to the Assets shall be transferred to the
Subsidiary, subject to any and all liens, claims and
defects of title.
(d) ACCOUNTS RECEIVABLE. All accounts receivable of Parent
are being assigned to Subsidiary without recourse.
Parent makes no representation as to the collectability
of any account receivable.
(e) INVENTORY. All inventory of Parent shown on EXHIBIT A
shall be assigned to Subsidiary, "As Is". Parent makes
no representation as to the condition or value of such
inventory.
(f) EQUIPMENT. All equipment of Parent shown on EXHIBIT A
shall be conveyed to Subsidiary, "As Is". Parent makes
no representation as to the condition or value of such
equipment.
(g) REAL PROPERTY. To the extent that the Assets include
real property and improvements thereon or leasehold
interests, Parent shall convey such real property and
improvements by quit claim deed or assignment without
warranties. Parent shall convey such property "As Is"
and makes no representation or warranty as to the
condition or value of such real property, improvements,
or interests.
(h) TITLE TO ASSETS. Parent shall assign and convey title to
the Assets "As Is, and Parent makes no representation or
warranty as to the status of Parent's title to the Assets
or the amount of or existence of any liens encumbering
such Assets.
7. REPRESENTATIONS AND WARRANTIES OF SUBSIDIARY. The Subsidiary
represents and warrants to the Parent as follows:
(a) ENTITY STATUS. The Subsidiary is a corporation duly
formed and existing in good standing under the laws of
the State of Colorado.
(b) ENFORCEABILITY. All transactions provided for herein and
all obligations of the Subsidiary have been duly
authorized by all requisite legal action, and all
agreements entered into, including the execution and
consummation of this Agreement, will be valid and
enforceable against the Subsidiary in accordance with
their terms subject to the availability of equitable
remedies.
(c) ASSUMED LIABILITIES AND OBLIGATIONS. The Subsidiary will
assume, pay and perform all the Assumed Liabilities and
Obligations as and when due, including completing all
contracts and work in progress which exist at the Spin-
Off Closing.
(d) CAPITALIZATION OF SUBSIDIARY. The Subsidiary will be
capitalized with the authorized capitalization of
10,000,000 shares of Common Stock.
(e) SUBSIDIARY'S BALANCE SHEET. The Subsidiary's assets and
liabilities immediately after Closing shall be as set
forth in EXHIBIT E.
(f) American Warrior's Balance Sheet. At the Merger Closing,
America Warrior shall deliver to the Parent Corporation
the most recent Balance Sheet.
8. TAXES. The Subsidiary shall be responsible for any taxes
attributable to the transactions described herein (including, without
limitation, taxes attributable to the contribution of assets to Subsidiary
by Parent, the assumption of liabilities of Parent by Subsidiary and the
distribution of Subsidiary's Common Stock to Parent) To the extent
permitted under Section 381(a) of the Internal Revenue Code of 1986, as
amended, Subsidiary shall succeed to and take into account certain tax
attributes of Parent including, without limitation, Parent s net operating
loss carryovers from prior taxable years.
9. POST-CLOSING COVENANTS. Following Closing:
(a) Parent and Subsidiary shall cooperate with respect to the
corporate records relating to the oil and gas production
business, including billing records, tax records, accounting
records and other materials which may be necessary for future
tax audits, other audits or other legal compliance matters. Each
party will preserve and maintain such records as may be
customary in the industry or consistent with government record
retention policies. Each party will allow the other access to
such records and will cooperate in providing information and
otherwise assist in responding to any legitimate business needs
of the other; and
(b) Subsidiary shall:
(i) Cause final state and federal income tax returns to be
prepared and filed for the Parent reflecting the income
and loss of Parent for
Parent's short taxable year commencing January 1, 2001
and ending on the date of the Merger Closing;
(ii) Cause a person who was an officer of Parent prior to the
Merger to sign such final income tax returns and other
returns on behalf of Parent.
(iii) Determine the amount of any distributions for federal
income tax purposes made to the shareholders of Parent
during such short taxable year (including any
distribution deemed to be made by Parent to its
shareholders of the value of its corporate charter).
(iv) Prepare and distribute to the shareholders of Parent
forms 1099 and other required information returns
reflecting the distributions and deemed distributions
made to such shareholders for such short taxable year.
(v) Prepare and cause form 966 to be filed with the Internal
Revenue Service in connection with any deemed dissolution
of Parent resulting from the Spin Off.
10. Miscellaneous.
(a) COMPLETE AGREEMENT. This Agreement sets forth the entire
Agreement of the parties hereto with respect to the subject
matter hereof and all prior agreements and understandings are
specifically superseded.
(b) SURVIVAL OF AGREEMENT. This Agreement and all terms, warranties
and provisions hereof will survive the Closing.
(c) SUCCESSORS AND ASSIGNS. This Agreement will be binding upon the
parties hereto and their respective successors and assigns.
(d) ARBITRATION. Any dispute arising in connection with this
Agreement shall be resolved by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association as then in effect. Such arbitration shall be held
in the City and County of Denver. The arbitrators shall be
instructed to award, in addition to damages or other remedies,
attorneys fees and costs of arbitration in favor of the
prevailing party.
(e) SPECIFIC ENFORCEMENT: LEGAL FEES. The parties acknowledge that
a breach of the provisions of this Agreement is likely to result
in irreparable and unreasonable harm to the other party, and
that injunctive relief, as well as damages, would be
appropriate. In the event action is brought to enforce or
construe any provisions of this Agreement, the prevailing party
shall be entitled to collect reasonable attorneys fees and
costs from the other party hereto.
(f) APPLICABLE LAW. This Agreement shall be construed in accordance
with the internal law of the State of Colorado without giving
effect to principles of conflicts of law. Any judicial action
relating to this Agreement shall be brought only in the state
or federal courts located in the State of Colorado and the
parties hereby, consent to the exclusive jurisdiction and venue
of such courts.
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IN WITNESS WHEREOF, this Agreement and Plan of Recognition has been
executed as of the date set forth above.
WINCO PETROLEUM CORPORATION,
a Colorado corporation
By: /s/ XXXXX X'XXXXX
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Xxxxx X'Xxxxx, President
WNCO, INC. f/k/a Winco Spin-Off
Corporation, a Colorado corporation
By: /s/ XXXXX X'XXXXX
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Xxxxx X'Xxxxx, President
EXHIBIT A
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ASSETS
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Cash: $276,977.43
Accounts
Receivable: The accounts receivable associated with the oil and gas
production business conducted by Winco Petroleum
Corporation in the amount of approximately $27,000(1).
All receivables of Winco are assigned to WNCO.
Prepaid
Insurance: $0
Capitalized
Legal Costs: $0
Inventory: $0
Equipment: All of the equipment used in the oil and gas production
business conducted by Winco Petroleum Corporations
having a book value of $41,958.
Name: All ownership and the rights to the names "Winco
Petroleum Corporation" or any combination thereof,
including all good will associated therewith. Winco
Petroleum Corporation shall take appropriate corporate
action to change its corporate name prior to the
expiration of 15 days from the Closing Date to a name,
which does not contain "Winco Petroleum Corporation or any
variant thereof.
Other: Books, records, documents of Winco
General Ledger of Winco
Financial records of Winco
Any and all federal or state tax returns or records
filed by Winco
Corporate minute books
Supplies, furniture
Corporate telephone numbers
Tax benefits and credits resulting from net operating
Losses, depletion, etc
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1 The amount of receivable is approximately $27,000. The actual
amount to be received from oil production sold, but not yet paid by the
oil purchaser, is not readily determinable and/or recorded until month end.
EXHIBIT B
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EXCLUDED ASSETS
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Corporate charter
Securities and Exchange Commission reporting status
EXHIBIT C
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ASSUMED LIABILITIES AND OBLIGATIONS
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Accounts
Payable: All accounts payable in the approximate amount of
$7,500.00(2) are assumed.
Accrued
Expenses,
Salaries
and Taxes: $0
Contracts: All amounts payable under the oil and gas leases
are assumed.
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2 The amount of payable is approximately $7,500.00. The actual
amount which will be due for expenses being incurred as a result
of the oil and gas leases, is not readily determinable and/or
recorded until month end.
EXHIBIT D
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INDEMNIFICATION AGREEMENT
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EXHIBIT E
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SUBSIDIARY'S ASSETS AND LIABILITIES
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None
EXHIBIT F
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