EXHIBIT 10.1
MERGER
AGREEMENT
Among
WINCO PETROLEUM CORPORATION,
a Colorado corporation,
WINCO MERGER CORPORATION,
a Colorado corporation,
WINCO SPIN-OFF CORPORATION,
a Colorado corporation, and
BUSINESS PRODUCTS, INC.,
a Colorado corporation.
TABLE OF CONTENTS
Page
1. THE MERGER AND RELATED TRANSACTIONS.. . . . . . . . . . . . . . . .2
1.1 The Winco/WSC Asset Spinoff . . . . . . . . . . . . . . . . .2
1.2 The Winco Reverse Split . . . . . . . . . . . . . . . . . . .2
1.3 The BPI/WMC Merger. . . . . . . . . . . . . . . . . . . . . .2
1.4 Effective Time of the Merger. . . . . . . . . . . . . . . . .2
1.5 Articles of Incorporation, Bylaws, Board of Directors
and Officers of the Surviving Corporation . . . . . . . . . .2
1.6 Certain Information With Respect to the Capital Stock of
WMC and BPI . . . . . . . . . . . . . . . . . . . . . . . . .3
1.7 Effect of Merger. . . . . . . . . . . . . . . . . . . . . . .3
1.8 Conversion of BPI Stock . . . . . . . . . . . . . . . . . . .3
1.9 Effect of Merger on WMC Capital Stock . . . . . . . . . . . .3
1.10 Delivery of Certificates. . . . . . . . . . . . . . . . . . .3
2. CLOSING.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3. REPRESENTATIONS AND WARRANTIES OF BPI CONCERNING BPI. . . . . . . .4
3.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . .4
3.2 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . .4
3.3 Capital Structure . . . . . . . . . . . . . . . . . . . . . .4
3.4 Predecessor Status; Etc . . . . . . . . . . . . . . . . . . .5
3.5 Spin-Off By BPI . . . . . . . . . . . . . . . . . . . . . . .5
3.6 Financial Statements. . . . . . . . . . . . . . . . . . . . .5
3.7 Liabilities and Obligations . . . . . . . . . . . . . . . . .6
3.8 Permits and Intangibles . . . . . . . . . . . . . . . . . . .6
3.9 Environmental Matters . . . . . . . . . . . . . . . . . . . .7
3.10 Personal Property . . . . . . . . . . . . . . . . . . . . . .8
3.11 Material Contracts and Commitments. . . . . . . . . . . . . .8
3.12 Real Property . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Compensation; Employment Agreements; Organized Labor
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . 12
3.16 Compliance With ERISA . . . . . . . . . . . . . . . . . . . 13
3.17 Conformity With Law; Litigation . . . . . . . . . . . . . . 14
3.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.19 No Violations . . . . . . . . . . . . . . . . . . . . . . . 15
3.20 Government Contracts. . . . . . . . . . . . . . . . . . . . 15
3.21 Absence of Changes. . . . . . . . . . . . . . . . . . . . . 15
3.22 Deposit Accounts; Powers of Attorney. . . . . . . . . . . . 17
3.23 Relations With Governments. . . . . . . . . . . . . . . . . 17
3.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 17
3.25 Prohibited Activities . . . . . . . . . . . . . . . . . . . 17
3.26 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . 17
3.27 Certain Business Relationships with BPI . . . . . . . . . . 17
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3.28 Authorization . . . . . . . . . . . . . . . . . . . . . . . 17
4. REPRESENTATIONS AND WARRANTIES OF WINCO, WMC AND WSC. . . . . . . 18
4.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . 18
4.2 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Capital Structure . . . . . . . . . . . . . . . . . . . . . 18
4.4 Predecessor Status; Etc . . . . . . . . . . . . . . . . . . 19
4.5 Spin-Off By Winco . . . . . . . . . . . . . . . . . . . . . 19
4.6 Financial Statements. . . . . . . . . . . . . . . . . . . . 19
4.7 Liabilities and Obligations . . . . . . . . . . . . . . . . 20
4.8 Permits and Intangibles . . . . . . . . . . . . . . . . . . 20
4.9 Environmental Matters . . . . . . . . . . . . . . . . . . . 21
4.10 Personal Property . . . . . . . . . . . . . . . . . . . . . 22
4.11 Material Contracts and Commitments. . . . . . . . . . . . . 22
4.12 Real Property . . . . . . . . . . . . . . . . . . . . . . . 25
4.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.14 Compensation; Employment Agreements; Organized Labor
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.15 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . 27
4.16 Compliance With ERISA . . . . . . . . . . . . . . . . . . . 27
4.17 Conformity With Law; Litigation . . . . . . . . . . . . . . 28
4.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.19 No Violations . . . . . . . . . . . . . . . . . . . . . . . 29
4.20 Government Contracts. . . . . . . . . . . . . . . . . . . . 29
4.21 Absence of Changes. . . . . . . . . . . . . . . . . . . . . 30
4.22 Deposit Accounts; Powers of Attorney. . . . . . . . . . . . 31
4.23 Relations With Governments. . . . . . . . . . . . . . . . . 31
4.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 31
4.25 Prohibited Activities . . . . . . . . . . . . . . . . . . . 31
4.26 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . 31
4.27 Certain Business Relationships. . . . . . . . . . . . . . . 32
4.28 Authorization . . . . . . . . . . . . . . . . . . . . . . . 32
5. CERTIFICATE OF THE BPI SHAREHOLDERS CONCERNING
THE TRANSACTION.. . . . . . . . . . . . . . . . . . . . . . . . . 32
5.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . 32
5.2 Title to the Shares . . . . . . . . . . . . . . . . . . . . 32
5.3 Purchase Entirely for His Own Account . . . . . . . . . . . 32
5.4 Disclosure of Information . . . . . . . . . . . . . . . . . 33
5.5 Restrictions on Transfer. . . . . . . . . . . . . . . . . . 33
6. COVENANTS OF BPI PRIOR TO CLOSING.. . . . . . . . . . . . . . . . 34
6.1 Access and Cooperation; Due Diligence . . . . . . . . . . . 34
6.2 Conduct of Business Pending Closing . . . . . . . . . . . . 34
6.3 Prohibited Activities . . . . . . . . . . . . . . . . . . . 35
6.4 No Shop . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.5 Notification of Certain Matters . . . . . . . . . . . . . . 36
6.6 Final Financial Statements. . . . . . . . . . . . . . . . . 36
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7. COVENANTS OF WINCO, WMC AND WSC PRIOR TO CLOSING. . . . . . . . . 37
7.1 Access and Cooperation; Due Diligence . . . . . . . . . . . 37
7.2 Conduct of Business Pending Closing . . . . . . . . . . . . 37
7.3 Prohibited Activities . . . . . . . . . . . . . . . . . . . 38
7.4 No Shop . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.5 Notification of Certain Matters . . . . . . . . . . . . . . 39
7.6 Final Financial Statements. . . . . . . . . . . . . . . . . 39
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF WINCO, WSC AND WMC.. . . . 39
8.1 Representations and Warranties; Performance of Obligations. 40
8.2 Satisfaction. . . . . . . . . . . . . . . . . . . . . . . . 40
8.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . . 40
8.4 Consents and Approvals. . . . . . . . . . . . . . . . . . . 40
8.5 Good Standing Certificates. . . . . . . . . . . . . . . . . 40
8.6 No Material Adverse Change. . . . . . . . . . . . . . . . . 40
8.7 Officer's Certificate . . . . . . . . . . . . . . . . . . . 40
8.8 Incumbency Certificate and Other Documents. . . . . . . . . 41
8.9 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . 41
8.10 Release of Obligations and Stock Options. . . . . . . . . . 41
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BPI
AND THE SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . 41
9.1 Representations and Warranties; Performance of Obligations. 41
9.2 Satisfaction. . . . . . . . . . . . . . . . . . . . . . . . 41
9.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . . 41
9.4 Consents and Approvals. . . . . . . . . . . . . . . . . . . 41
9.5 Good Standing Certificates. . . . . . . . . . . . . . . . . 42
9.6 No Material Adverse Change. . . . . . . . . . . . . . . . . 42
9.7 Officer's Certificate . . . . . . . . . . . . . . . . . . . 42
9.8 Incumbency Certificate and Other Documents. . . . . . . . . 42
9.9 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . 42
9.10 Release of Obligations. . . . . . . . . . . . . . . . . . . 42
10. ADDITIONAL AGREEMENTS.. . . . . . . . . . . . . . . . . . . . . . 42
10.1 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . 42
10.2 Completion of the Disclosure Letters. . . . . . . . . . . . 43
10.3 Public Announcements. . . . . . . . . . . . . . . . . . . . 43
10.4 Further Assurances. . . . . . . . . . . . . . . . . . . . . 43
10.5 The Spin-Off. . . . . . . . . . . . . . . . . . . . . . . . 43
10.6 Winco Merger Corporation. . . . . . . . . . . . . . . . . . 43
10.7 Reverse Split . . . . . . . . . . . . . . . . . . . . . . . 44
10.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11. TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . 44
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 44
11.2 Liabilities in Event of Termination . . . . . . . . . . . . 45
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12. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . . . . . 45
12.1 Indemnification by BPI. . . . . . . . . . . . . . . . . . . 45
12.2 Indemnification by Winco and WSC. . . . . . . . . . . . . . 45
12.3 Indemnification Notice. . . . . . . . . . . . . . . . . . . 45
12.4 Matters Involving Third Parties . . . . . . . . . . . . . . 46
13. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 46
13.1 Survival of Representations, Warranties and Agreements. . . 46
13.2 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . 47
13.3 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 47
13.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 47
13.5 Brokers and Agents. . . . . . . . . . . . . . . . . . . . . 47
13.6 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 48
13.9 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . 48
13.10 Exercise of Rights and Remedies . . . . . . . . . . . . . . 49
13.11 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.12 Reformation and Severability. . . . . . . . . . . . . . . . 49
13.13 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . 49
13.14 Captions; Construction. . . . . . . . . . . . . . . . . . . 49
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MERGER AGREEMENT
THIS AGREEMENT (the "Agreement") is dated for reference purposes
August 18, 2000, among Winco Petroleum Corporation, a Colorado corporation
("Winco"), Winco Merger Corporation, a Colorado corporation ("WMC"), Winco
Spin-off Corporation, a Colorado corporation ("WSC"), and Business
Products, Inc., a Colorado corporation ("BPI").
RECITALS
A. Winco is desirous of entering into a merger transaction with BPI,
as a result of which the shareholders of BPI (the "BPI Shareholders") will
own approximately ninety-two and one-half percent (92.5%) of Winco; the
current shareholders of Winco (the "Winco Shareholders") will retain an
ownership of approximately seven and one-half percent (7.5%) in Winco. The
transactions to be undertaken by Winco and BPI to accomplish this result
are herein collectively referred to as the "Merger".
B. In order to accomplish the Merger, Winco has created WMC and WSC
as wholly-owned subsidiaries of Winco.
C. In order to accomplish the Merger, BPI will merge into WMC, and
WMC shall be the surviving entity. Pursuant to this Agreement, the BPI
shareholders shall receive common stock in Winco in exchange for the
cancellation of their BPI common stock.
D. Prior to the Merger, all of the assets, obligations and
liabilities of Winco shall be transferred to and assumed by WSC, and all of
the shares of common stock in WSC shall be distributed by Winco to the
Winco Shareholders. In addition, prior to the Merger, Winco shall
undertake a reverse stock split, all as described herein.
E. WSC and certain of its affiliates shall enter into an Indemnity
Agreement with Winco.
F. The respective boards of directors of Winco, WMC, WSC and BPI
deem it advisable and in the best interest of each corporation and their
respective shareholders that the foregoing transaction to be accomplished
in accordance with the terms of this agreement, and such boards of
directors have authorized and approved the execution and delivery of this
agreement on behalf of such respective corporations.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the respective
covenants and provisions herein contained, and intending to be legally
bound hereby, the parties agree as follows:
1. THE MERGER AND RELATED TRANSACTIONS.
1.1 THE WINCO/WSC ASSET SPINOFF. Immediately prior to the Merger,
and upon the terms and subject to the conditions set forth in this
Agreement, all of the assets, liabilities and obligations of Winco shall be
transferred to and assumed by WSC in accordance with Section 10.5 hereof
(the "Spin Off").
1.2 THE WINCO REVERSE SPLIT. Under the terms and subject to the
conditions set forth in this Agreement, Winco shall undertake a reverse
stock split in accordance with Section 10.7 hereof (the "Reverse Stock
Split").
1.3 THE BPI/WMC MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, BPI shall be merged with and into WMC.
Following the Merger, the separate corporate existence of BPI shall cease
and WMC shall continue as the surviving party in the Merger (WMC is
sometimes referred to as the "Surviving Corporation").
1.4 EFFECTIVE TIME OF THE MERGER. While the necessary documentation
to complete the forgoing transactions shall occur simultaneously at Closing
(as defined in Article 2), the transactions shall be deemed to have
occurred in the order set forth in Section 1.1, 1.2 and 1.3, and all
filings with the Colorado Secretary of State and other governmental filings
shall be recorded in such order. Notwithstanding the forgoing, none of the
foregoing events shall occur unless each of the other foregoing events
shall have occurred. At the Closing, (1) Winco shall complete the Spin
Off; (2) Winco shall take such actions as are necessary to complete the
Reverse Stock Split and (3) WMC and BPI shall file Articles of Merger in
such form as is required by and which shall be executed in accordance with
Section ▇-▇▇▇-▇▇▇ of the Colorado Business Corporation Act. The Merger
shall become effective at such time as the Articles of Merger are duly
filed with the Colorado Secretary of State or at such time as WMC and BPI
shall agree and as shall be specified in the Articles of Merger (the
"Effective Time of the Merger").
1.5 ARTICLES OF INCORPORATION, BYLAWS, BOARD OF DIRECTORS AND
OFFICERS OF THE SURVIVING CORPORATION.
(a) The ARTICLES of Incorporation of WMC as approved by BPI and
as in effect immediately prior to the Effective Time of the Merger
shall be the Articles of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by
applicable law, except that the name of the Surviving Corporation
shall be changed to a name selected by the shareholders of BPI.
(b) At the Effective Time of the Merger, the Bylaws of WMC as
approved by BPI and as in effect immediately prior to the Effective
Time of the Merger shall be the Bylaws of the Surviving Corporation
until thereafter changed or amended as provided therein or by
applicable law.
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(c) The Directors and officers of Winco and of the Surviving
Corporation shall be the persons to be listed in Schedule 1.3(iii) of
the Winco Disclosure Letter , and each person shall hold his or her
respective office or offices from and after the Effective Time of the
Merger until his or her successor shall have been elected and shall
have qualified or as otherwise provided in the Bylaws of Winco and of
the Surviving Corporation.
1.6 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF WMC AND
BPI. The respective designations and numbers of outstanding shares of each
class of outstanding capital stock of Winco, WMC and BPI as of the date of
this Agreement are as follows:
(i) The authorized and outstanding capital stock of WMC
consists of 100 shares of common stock, of which 100 shares are
issued and outstanding (the "WMC Stock").
(ii) The authorized capital stock of BPI consists of 50,000
shares of common stock, no par value, of which 1,500 shares are
issued and outstanding (the "BPI Stock").
(iii) The authorized capital stock of Winco, prior to the
Reverse Stock Spilt consists of 500,000,000 shares of common
stock, no par value, of which 41,152,606 shares are issued and
outstanding (the "Winco Stock").
1.7 EFFECT OF MERGER. At the Effective Time of the Merger, the
effect of the Merger shall be as provided in Section ▇-▇▇▇-▇▇▇ of the
Colorado Business Corporation Act.
1.8 CONVERSION OF BPI STOCK. At the Effective Time of the Merger and
without any action on the part of the holders of the BPI Stock, the BPI
Stock shall be converted into the securities of Winco as set forth in
Schedule 1.8.
1.9 EFFECT OF MERGER ON WMC CAPITAL STOCK. At the Effective Time of
the Merger without any action on the part of the holders of WMC Stock, each
share of WMC Stock issued and outstanding immediately prior to the
Effective Time of the Merger shall remain outstanding as one share of WMC
Stock.
1.10 DELIVERY OF CERTIFICATES. At the Effective Time of the Merger
the BPI Stock shall be canceled and the BPI Shareholders shall receive
instruments evidencing the ownership of the securities of Winco as set
forth on Schedule 1.10. Each BPI Shareholder shall deliver to Winco at the
Closing the Certificates representing the shares of BPI Stock owned by the
BPI Shareholder (the "BPI Certificates"), duly endorsed in blank by the BPI
Shareholder, or accompanied by blank stock powers. Each BPI Shareholder
agrees promptly to cure any deficiencies with respect to the endorsement of
his BPI Certificates or other documents of conveyance with respect to the
BPI Stock or with respect to the stock powers accompanying any BPI Stock.
Until surrender as contemplated by this Section 1.10, each BPI Certificate
shall be deemed at any time after the Effective Time of the Merger to
represent only the Winco Stock
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received by the shareholders of BPI, as set forth in Schedule 1.8, and
each holder of a BPI Certificate shall cease to have any rights with
respect to the BPI Stock.
2. CLOSING.
Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated by this Agreement (the "Closing") will take
place on the second business day after the satisfaction or waiver (subject
to applicable law) of the conditions set forth in Sections 8 and 9, unless
another time or date is agreed to in writing by the parties hereto (the
actual time and date of the Closing being referred to herein as the
"Closing Date"). The Closing shall be held at the offices of Rothgerber
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
unless another place is agreed to in writing by the parties hereto.
3. REPRESENTATIONS AND WARRANTIES OF BPI CONCERNING BPI.
Except as provided in the BPI Disclosure Letter (as defined below) to
be delivered pursuant to Section 10.2, BPI represents and warrants to Winco
that all of the following representations and warranties in this Section 3
are true at the date of this Agreement and shall be true at the time of
Closing. As used in this Agreement, the "BPI Disclosure Letter" shall mean
the disclosure letter delivered by BPI pursuant to this Section 3.
3.1 DUE ORGANIZATION. BPI is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation, and has the requisite power and authority to carry on its
business as it is now being conducted. BPI is duly qualified to do
business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification necessary, except (i) as will be set forth on Schedule 3.1 to
the BPI Disclosure Letter or (ii) where the failure to be so authorized or
qualified would not have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise), of
BPI taken as a whole (as used herein with respect to BPI, or with respect
to any other person, a "Material Adverse Effect"). Schedule 3.1 to the BPI
Disclosure Letter shall set forth the jurisdiction in which BPI is
incorporated and contains a list of all jurisdictions in which BPI is
authorized or qualified to do business. True, complete and correct copies
of the Articles of Incorporation and Bylaws, each as amended, of BPI (the
"BPI Charter Documents") shall be made available to Winco. The stock
records of BPI as heretofore made available to Winco, are correct and
complete in all material respects. There are no minutes or other records
or proceedings of BPI which have not been made available to Winco, and all
of such minutes or other records of proceedings are correct and complete in
all respects.
3.2 SUBSIDIARIES. BPI has no subsidiaries.
3.3 CAPITAL STRUCTURE. The authorized capital stock of BPI consists
of 50,000 shares of common stock, no par value, of which 1,500 shares are
issued and outstanding on July 1, 2000. All of the outstanding shares of
common stock have been duly authorized and are validly issued, fully paid
and non-assessable. BPI has no common stock or other shares of capital
stock reserved for or otherwise subject to issuance. The names of all of
the holders of the BPI Stock
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and the number of shares owned by each holder will be set forth in Schedule
3.3 to the BPI Disclosure Letter. Except as will be listed in Schedule 3.3
to the BPI Disclosure Letter or as set forth above, there are no pre-emptive
or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or sell any shares of
capital stock or other securities of BPI or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any person
a right to subscribe for or acquire, any securities of BPI, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. BPI does not have outstanding any bonds, debentures, notes or
other debt obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote).
There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to BPI. There are no
voting trusts, proxies or other agreements or understandings with respect
to the voting of the capital stock of BPI.
3.4 PREDECESSOR STATUS; ETC. There shall be included in Schedule 3.4
to the BPI Disclosure Letter is an accurate list of all names of all
predecessor companies of BPI, including the names of any entities acquired
by BPI (by stock purchase, merger or otherwise) or owned by BPI or from
whom BPI previously acquired material assets, in any case, from the
earliest date upon which any person acquired his or her stock in BPI.
Except as will be disclosed on Schedule 3.4 to the BPI Disclosure Letter,
BPI has not been, within such period of time, a subsidiary or division of
another corporation or a part of an acquisition which was later rescinded.
3.5 SPIN-OFF BY BPI. Except as will be set forth on Schedule 3.5 to
the BPI Disclosure Letter, there has not been any sale, spin-off or split-up
of material assets of either BPI or any other person or entity that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, BPI ("Affiliates") since
its inception.
3.6 FINANCIAL STATEMENTS. Schedule 3.6 to the BPI Disclosure Letter
will include copies of the following financial statements (the "BPI
Financial Statements") of BPI: BPI's audited Balance Sheets as of April 30,
2000, 1999 and 1998 and audited Statements of Income and Comprehensive
Income, Stockholders' Equity and Cash Flows for each of the fiscal years
ended April 30, 2000, 1999 and 1998 (April 30, 2000 being hereinafter
referred to as the "Balance Sheet Date") and unaudited interim financial
statements through June 30, 2000 and the last day of the calendar month
immediately preceding Closing. The BPI Financial Statements have been
prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods indicated
(except as noted thereon or as will be noted on Schedule 3.6 to the BPI
Disclosure Letter). Except as will be set forth on Schedule 3.6 to the BPI
Disclosure Letter, such Balance Sheets present fairly in all material
respects the financial position of BPI as of the dates indicated thereon,
and such Statements of Income and Comprehensive Income, Stockholders'
Equity and Cash Flows present fairly in all material respects the results
of operations for the periods indicated thereon, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount.
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3.7 LIABILITIES AND OBLIGATIONS. Schedule 3.7 to the BPI Disclosure
Letter will include accurate lists as of the Balance Sheet Date of (i) all
material liabilities of BPI which are not reflected on the Balance Sheet of
BPI at the Balance Sheet Date or otherwise reflected in the BPI Financial
Statements at the Balance Sheet Date which by their nature would be
required in accordance with GAAP to be reflected in the Balance Sheet, and
(ii) all loan agreements, indemnity or guaranty agreements, bonds,
mortgages, liens, pledges or other security agreements. Except as will be
set forth on Schedule 3.7 to the BPI Disclosure Letter, since the Balance
Sheet Date BPI has not incurred any material liabilities of any kind,
character and description, whether accrued, absolute, secured or unsecured,
contingent or otherwise, other than liabilities incurred in the ordinary
course of business. Schedule 3.7 to the BPI Disclosure Letter will also
include , in the case of those contingent liabilities related to pending or
threatened litigation, or other liabilities which are not fixed or
otherwise accrued or reserved, a good faith and reasonable estimate of the
maximum amount which BPI reasonably expects will be payable. For each such
contingent liability or liability for which the amount is not fixed or is
contested, BPI has provided to Winco the following information:
(a) A summary description of the liability together with the
following:
(i) copies of all relevant documentation relating thereto;
(ii) amounts claimed and any other action or relief sought;
and
(iii) name of claimant and all other parties to the claim,
suit or proceeding;
(b) The name of each court or agency before which such claim,
suit or proceeding is pending; and
(c) The date such claim, suit or proceeding was instituted; and
(d) A good faith and reasonable estimate of the maximum amount,
if any, which is likely to become payable with respect to each such
liability. If no estimate is provided, the estimate shall for purposes
of this Agreement be deemed to be zero.
3.8 PERMITS AND INTANGIBLES.
(a) BPI holds all licenses, franchises, permits and other
governmental authorizations the absence of any of which could have a
Material Adverse Effect on BPI's business and Schedule 3.8 to the BPI
Disclosure Letter will include an accurate list and summary
description of all such licenses, franchises, permits and other
governmental authorizations, including permits (it being understood
and agreed that a list of all environmental permits and other
environmental approvals will be set forth on Schedule 3.9 to the BPI
Disclosure Letter), titles (including motor vehicle titles and current
registrations), fuel permits, licenses, franchises and certificates,
as well as (a) registered or unregistered trademarks, trade names,
patents, patent applications and inventions and
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discoveries that may be patentable, (b) copyrights owned or held by
BPI or any of its employees (including interests in software or other
technology systems, programs and intellectual property). The licenses,
franchises, permits and other governmental authorizations will be
listed on Schedules 3.8 and 3.9 to the BPI Disclosure Letter and are
valid, and BPI has not received any notice that any governmental
authority intends to cancel, terminate or not renew any such license,
franchise, permit or other governmental authorization. BPI has
conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in the
licenses, franchises, permits and other governmental authorizations as
will be listed on Schedules 3.8 and 3.9 of the BPI Disclosure letter
and is not in violation of any of the foregoing except where such non-
compliance or violation would not have a Material Adverse Effect on
BPI. Except as will be specifically provided in Schedule 3.8 to the
BPI Disclosure Letter, the transactions contemplated by this Agreement
will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to BPI by, any such
licenses, franchises, permits or government authorizations.
(b) The patents, the marks and copyrights, as well as the know
how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans and
drawings owned, used or licensed by BPI (collectively, the "Trade
Secrets") are all those necessary to enable BPI to conduct and to
continue to conduct its business as it is currently conducted.
Schedule 3.8 of the BPI Disclosure Letter will also contain a
description of all material Trade Secrets owned or used by BPI.
Except as will be set forth on Schedule 3.8 to the BPI Disclosure
Letter (a) all of the patents, marks, copyrights and Trade Secrets
(collectively, the "Intellectual Property") are owned, or used under
valid licenses by BPI, and are free and clear of all liens and other
adverse claims; (b) BPI has not infringed on or misappropriated, is
not now infringing on or misappropriating, and has not received any
notice that it is infringing on, misappropriating, or otherwise
conflicting with the intellectual property rights of any third
parties; (c) there is no claim pending or threatened against BPI with
respect to the alleged infringement or misappropriation by BPI or a
conflict with, any intellectual property rights of others; (d) the
operation of any aspect of the business in the manner in which it has
heretofore been operated or is presently operated does not give rise
to any such infringement or misappropriation; and (e) there is no
infringement or misappropriation of the Intellectual Property by a
third party or claim, pending or threatened, against any third party
with respect to the alleged infringement or misappropriation of the
Intellectual Property by such third party.
3.9 ENVIRONMENTAL MATTERS. Except as will be set forth on Schedule
3.9 to the BPI Disclosure Letter, and except where any failure to comply or
action would not have a Material Adverse Effect, (i) BPI has complied with
and is in compliance with all Federal, state, local and foreign statutes
(civil and criminal), laws, ordinances, regulations, rules, notices,
permits, judgments, orders and decrees applicable to any of them or any of
their respective properties, assets, operations and businesses relating to
environmental protection (collectively "Environmental Laws") including,
without limitation, Environmental Laws relating to air, water, land and the
generation, storage, use, handling, transportation, treatment or disposal of
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Hazardous Wastes and Hazardous Substances including petroleum and petroleum
products (as such terms are defined in any applicable Environmental Laws);
(ii) BPI has obtained and adhered to all necessary permits and other
approvals necessary to treat, transport, store, dispose of and otherwise
handle Hazardous Wastes and Hazardous Substances, an accurate list of all
of which permits and approvals will beset forth on Schedule 3.9 to the BPI
Disclosure Letter, and have reported to the appropriate authorities, to the
extent required by all Environmental Laws, all past and present sites owned
and operated by BPI where Hazardous Wastes or Hazardous Substances have
been treated, stored, disposed of or otherwise handled; (iii) there have
been no releases or threats of releases (as defined in Environmental Laws)
at, from, in or on any property owned or operated by BPI except as
permitted by Environmental Laws; (iv) there is no on-site or off-site
location to which BPI has transported or disposed of Hazardous Wastes and
Hazardous Substances or arranged for the transportation of Hazardous Wastes
and Hazardous Substances, which site is the subject of any Federal, state,
local or foreign enforcement action or any other investigation which is
reasonably likely to lead to any claim against BPI for any clean-up cost,
remedial work, damage to natural resources, property damage or personal
injury, including, but not limited to, any claim under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended;
and (v) BPI has no contingent liability in connection with any release of
any Hazardous Waste or Hazardous Substance into the environment.
3.10 PERSONAL PROPERTY. Schedule 3.10 to the BPI Disclosure Letter
will include an accurate list of (i) all personal property owned by BPI
with an individual value in excess of $50,000 acquired since April 30,
2000 and (ii) all leases and agreements in respect of personal property,
including, in the case of each of (i) and (ii), (1) true, complete and
correct copies of all such leases and (2) an indication as to which assets
are currently owned, or were formerly owned, by shareholders, relatives of
shareholders, or Affiliates of BPI. Except as will be set forth on
Schedule 3.10 to the BPI Disclosure Letter, (x) all material personal
property used by BPI in its business is either owned by BPI or leased by
BPI pursuant to a lease which will be included on Schedule 3.10 to the BPI
Disclosure Letter, (y) all of the personal property which will be listed on
Schedule 3.10 to the BPI Disclosure Letter is in good working order and
condition, ordinary wear and tear excepted and (z) all leases and
agreements which will be included on Schedule 3.10 to the BPI Disclosure
Letter are in full force and effect and constitute valid and binding
agreements of the parties (and their successors) thereto in accordance with
their respective terms.
3.11 MATERIAL CONTRACTS AND COMMITMENTS. Schedule 3.11 to the BPI
Disclosure Letter will include an accurate list as of or on the date
hereof, of all material written or oral leases, agreements or other
contracts or legally binding contractual rights or contractual obligations
or contractual commitments relating to or in any way affecting the
operation or ownership of the business of BPI (the "Material Contracts"),
including but not limited, those of a type described below:
(a) Any consulting agreement, employment agreement, change-in-
control agreement, and collective bargaining arrangements with any
labor union and any such agreements currently in negotiation or
proposed;
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(b) Any contract for capital expenditures or the acquisition or
construction of fixed assets in excess of $50,000;
(c) Any contract for the purchase, maintenance or acquisition,
or the sale or furnishing, of materials, supplies, merchandise,
products, machinery, equipment, parts or other property or services
(except if such contract is made in the ordinary course of business
and requires aggregate future payments of less than $50,000);
(d) Any contract other than trade payables in the ordinary
course of business relating to the borrowing of money, or the guaranty
of another person's borrowing of money, including, without limitation,
any notes, mortgages, indentures and other obligations, guarantees of
performance, agreements and instruments for or relating to any lending
or borrowing, including assumed indebtedness;
(e) Any contract granting any person a lien on all or any part
of the assets of BPI;
(f) Any contract for the cleanup, abatement or other actions in
connection with hazardous materials as defined under any Environmental
Laws, the remediation of any existing environmental liabilities or
relating to the performance of any environmental audit or study;
(g) Any contract granting to any person an option or a first
refusal, first-offer or similar preferential right to purchase or
acquire any material assets of BPI;
(h) Any contract with any agent, distributor or representative
which is not terminable by BPI upon ninety calendar days' or less
notice without penalty;
(i) Any contract under which BPI is (1) a lessee or sublessee of
any machinery, equipment, vehicle or other tangible personal
property, or (2) a lessor of any tangible personal property owned by
BPI, in either case having an original value in excess of $50,000;
(j) Any contract under which BPI has granted or received a
license or sublicense or under which it is obligated to pay or has the
right to receive a royalty, license fee or similar payment;
(k) Any contract concerning any Affiliates;
(l) Any contract providing for the indemnification or holding
harmless of any officer, director, employee or other person, other
than as provided in the by-laws of BPI;
(m) Any contract for purchase or sale by BPI or the granting of
any options with respect to, or providing for any labor, services or
materials (including brokerage or
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management services) involving any real property on which BPI conducts
any aspect of its business involving aggregate future payments of more
than $50,000;
(n) Any contract limiting, restricting or prohibiting BPI from
conducting business anywhere in the United States or elsewhere in the
world;
(o) Any joint venture or partnership agreement;
(p) Any lease, sublease or associated agreements relating to the
property leased by BPI;
(q) Any material contract requiring prior notice, consent or
other approval upon a change of control in the equity
ownership of BPI, which contracts shall be separately
identified on Schedule 3.11 to the BPI Disclosure Letter;
(r) Any contract with a customer of BPI involving work to be
performed or product to be delivered, in each case subsequent to April 30,
2000, in excess of $50,000;
(s) Any other contract, whether or not made in the ordinary
course of business, which involves future payments in excess of $50,000.
BPI has provided Winco a true and complete copy of each written Material
Contract and a true and complete summary of each oral Material Contract, in
each case including all amendments or other modifications thereto. Except
as will be set forth on Schedule 3.11 to the BPI Disclosure Letter, each
Material Contract is a valid and binding obligation of, and enforceable in
accordance with its terms against, BPI, and the other parties thereto, and
is in full force and effect, subject only to bankruptcy, reorganization,
receivership and other laws affecting creditors' rights generally. Except
as will be set forth on Schedule 3.11 of the BPI Disclosure Letter, BPI has
performed all obligations required to be performed by it as of the date
hereof and will have performed all obligations required to be performed by
it as of the Closing Date under each Material Contract and neither BPI, nor
any other party to any Material Contract is in breach or default
thereunder, and there exists no condition which would, with or without the
lapse of time or the giving of notice, or both, constitute a breach or
default thereunder. BPI has not been notified that any party to any
Material Contract intends to cancel, terminate, not renew, or exercise an
option under any Material Contract, whether in connection with the
transactions contemplated hereby or otherwise.
3.12 REAL PROPERTY. Schedule 3.12 to the BPI Disclosure Letter will
set forth a correct and complete list, and a brief description of all real
property leased by BPI (the "Leased Real Property"), and all facilities
thereon. Except as lessee of Leased Real Property, BPI is not a lessee
under or otherwise a party to any lease, sublease, license, concession or
other agreement, whether written or oral, pursuant to which another person
or entity has granted to BPI the right to use or occupy all or any portion
of any real property. BPI does not have an ownership interest in any real
property.
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BPI has, assuming good title in the landlord (which is represented to
be so with respect to any Leased Property owned by ▇▇▇▇▇▇▇ ▇. St. ▇▇▇▇), a
valid leasehold interest in the Leased Property free and clear of all
liens, assessments or restrictions (including, without limitation, inchoate
liens arising out of the provision of labor, services or materials to any
such Real Property) other than (a) mortgages shown on the BPI Financial
Statements as securing specified liabilities or obligations, with respect
to which no default (or event that, with notice or lapse of time or both,
would constitute a default) exists, (b) liens for current taxes not yet
due, and (c) minor imperfections of title, such as utility and access
easements that do not impair the intended use of the Real Property, none of
which is substantial in amount, materially detracts from the value or
impairs the use of the property subject thereto, or impairs the operations
of BPI, and zoning laws and other land use restrictions or restrictive
covenants that do not materially impair the present use of the property
subject thereto. The Real Property constitutes all the real properties
reflected on the BPI Financial Statements or used or occupied by BPI in
connection with its business or otherwise.
With respect to the Leased Real Property, except as will be reflected
on Schedule 3.12 to the BPI Disclosure Letter:
(a) BPI is in exclusive possession thereof and no easements,
licenses or rights are necessary to conduct business thereon in
addition to those which exist as of the date hereof;
(b) No portion thereof is subject to any pending condemnation
proceeding or proceeding by any public or quasi-public authority
materially adverse to the Leased Real Property and there is no
threatened condemnation or proceeding with respect thereto;
(c) (i) the buildings, plants, improvements, structures and
fixtures at the Leased Real Property, including, without limitation,
heating, ventilation and air conditioning systems, roofs, foundations
and floors, are in good operating condition and repair; and (ii) the
Leased Real Property is not in violation of any health, safety,
building, or environmental ordinances, laws, codes or regulations; nor
has any notice of any claimed violation of any such ordinances, laws,
codes or regulations been served on BPI;
(d) The Leased Real Property is supplied with utilities and
other third-party services, such as water, sewer, electricity, gas,
roads, rail service and garbage collection, necessary for the current
operation of the business and such Leased Real Property is maintained
in all material respects in accordance with all laws applicable to BPI
or the Leased Real Property;
(e) BPI is not a party to any written or oral agreement or
undertaking with owners or users of properties adjacent to the Leased
Real Property relating to the use, operation or maintenance of such
facility or any adjacent real property;
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(f) BPI is not a party to any lease, sublease, license,
concession or other agreement, whether written or oral, pursuant to
which BPI has granted to any party or parties the right to use or
occupy all or any portion of the Leased Real Property;
(g) To the extent that BPI has responsibility under the lease(s)
for the Leased Real Property for compliance with the provisions of the
ADA, all alterations, rehabilitations, structures, or improvements in
the Leased Property comply with the ADA;
(h) (i) There are no material defects in any improvements on or
to the Leased Real Property; (ii) the Leased Real Property is free
from regulated quantities of asbestos; and (iii) the Leased Real
Property is free from flooding and leaks.
3.13 INSURANCE. Schedule 3.13 to the BPI Disclosure Letter will
include (i) an accurate list of all insurance policies carried by BPI since
May 1, 1997, and (ii) an accurate list of all insurance loss claims or
workers compensation claims received since May 1, 1997 and complete copies
of the foregoing items have been delivered to Winco. Such insurance
policies evidence all of the insurance that BPI has been required to carry
pursuant to all of its contracts and other agreements and pursuant to all
applicable laws. All insurance policies for the current policy periods are
in full force and effect and shall remain in full force and effect through
the Closing Date. Since May 1, 1997, no insurance carried by BPI has been
canceled by the insurer and BPI has not been denied coverage.
3.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
Schedule 3.14 to the BPI Disclosure Letter will include an accurate list of
(i) all officers, directors and key employees of BPI, (ii) all employment
agreements with such officers, directors and key employees and the rate of
compensation (and the portions thereof attributable to salary, bonus and
other compensation, respectively) of each of such persons as of the Balance
Sheet Date and the date hereof. BPI has provided to Winco true, complete
and correct copies of any employment agreements for persons to be listed on
Schedule 3.14 to the BPI Disclosure Letter. Since the Balance Sheet Date,
there have been no increases in the compensation payable or any special
bonuses to any officer, director, key employee or other employee, except
ordinary salary increases implemented on a basis consistent with past
practices. Except as will be set forth on Schedule 3.14 to the BPI
Disclosure Letter, (i) BPI is not bound by or subject to (and none of its
assets or properties is bound by or subject to) any arrangement with any
labor union, (ii) no employees of BPI are represented by any labor union or
covered by any collective bargaining agreement, (iii) no campaign to
establish such representation is in progress and (iv) there is no pending
or threatened labor dispute involving BPI and any group of its employees
nor has BPI experienced any labor interruptions over the past three years.
BPI believes its relationship with its employees to be good.
3.15 EMPLOYEE BENEFIT PLANS. Schedule 3.15 to the BPI Disclosure
Letter shall set forth all employee benefit plans of BPI, including all
employment agreements and other agreements or arrangements containing
"golden parachute" or other similar provisions, and deferred compensation
agreements. BPI has delivered to Winco true, complete and correct copies
of such
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plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the
employee benefit plans, if any, to be described on Schedule 3.15 to the BPI
Disclosure Letter, BPI does not sponsor, maintain or contribute to any plan
program, fund or arrangement that constitutes an "employee pension benefit
plan," nor has BPI any obligation to contribute to or accrue or pay any
benefits under any deferred compensation or retirement funding arrangement
on behalf of any employee or employees (such as, for example, and without
limitation, any individual retirement account or annuity, any "excess
benefit plan" (within the meaning of Section 3(36) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any non-
qualified deferred compensation arrangement). For the purposes of this
Agreement, the term "employee pension benefit plan" shall have the same
meaning as is given that term in Section 3(2) of ERISA. BPI has not
sponsored, maintained or contributed to any employee pension benefit plan
other than the plans to be set forth on Schedule 3.15 to the BPI Disclosure
Letter, nor is BPI required to contribute to any retirement plan pursuant
to the provisions of any collective bargaining agreement establishing the
terms and conditions or employment of any employees of BPI. All accrued
contribution obligations of BPI with respect to any plan to be listed on
Schedule 3.15 to the BPI Disclosure Letter have either been fulfilled in
their entirety or are fully reflected on the balance sheet of the BPI as of
the Balance Sheet Date.
3.16 COMPLIANCE WITH ERISA. All plans that are intended to qualify
(the "Qualified Plans") under Section 401(a) of the Code will be listed on
Schedule 3.15 to the BPI Disclosure Letter are, and have been so qualified
and have been determined by the Internal Revenue Service to be so
qualified, and copies of such determination letters will be included as
part of Schedule 3.15 to the BPI Disclosure Letter. Except as will be
disclosed on Schedule 3.16 to the BPI Disclosure Letter, all reports and
other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits or tax returns) have been timely
filed or distributed, and copies thereof will be included as part of
Schedule 3.15 to the BPI Disclosure Letter. Neither BPI nor any of the BPI
stockholders has engaged in any transaction prohibited under the provisions
of Section 4975 of the Code or Section 406 of ERISA. No plan to be listed
in Schedule 3.15 to the BPI Disclosure Letter has incurred an accumulated
funding deficiency, as defined in Section 412(a) of the Code and Section
302(1) of ERISA; and BPI has not incurred any liability for excise tax or
penalty due to the Internal Revenue Service nor any liability to the
Pension Benefit Guaranty Corporation.
(a) There have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified Plan intended to
qualify under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service;
(b) No plan to be listed in Schedule 3.15 to the BPI Disclosure
Letter, subject to the provisions of Title IV of ERISA, has been
terminated;
(c) There have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any such plan listed
in Schedule 3.15 to the BPI Disclosure Letter;
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(d) BPI has not incurred liability under Section 4062 of ERISA; and
(e) No circumstances exist pursuant to which BPI could have any
direct or indirect liability whatsoever (including, but not limited
to, any liability to any multiemployer plan or the PBGC under Title IV
of ERISA or to the Internal Revenue Service for any excise tax or
penalty, or being subject to any statutory lien to secure payment of
any such liability) with respect to any plan now or heretofore
maintained or contributed to by any entity other than BPI that is, or
at any time was, a member of a "controlled group" (as defined in
Section 412(n)(6)(B) of the Code) that includes BPI.
3.17 CONFORMITY WITH LAW; LITIGATION.
(a) Except to the extent will be set forth on Schedule 3.17 to
the BPI Disclosure Letter, BPI is not in violation of any law or
regulation or any order of any court or Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it which would have a
Material Adverse Effect.
(b) Except as will be set forth on Schedule 3.17 to the BPI
Disclosure Letter (which shall disclose the parties to, nature of and
relief sought for each matter to be disclosed), other than collection
actions by BPI, in the ordinary course of business on its own behalf,
none of which is greater than $25,000 and which in the aggregate do
not exceed $50,000:
(i) There is no suit, action, proceeding, investigation,
claim or order pending or threatened against BPI, or with respect
to any Employee Plan, or any fiduciary of any such plan, or
pending or threatened against any of the officers, directors or
employees of BPI with respect to the business or currently
proposed business activities of BPI, or to which BPI is otherwise
a party, or which may have or is likely to have a Material
Adverse Effect, before any court, or before any governmental
authority, department, commission, bureau, agency or other
governmental department or arbitrator (collectively, "Claims"),
nor is there any basis for any such Claims.
(ii) BPI is not subject to any unsatisfied or continuing
judgment, order or decree of any court or governmental authority,
and BPI is not otherwise exposed, from a legal standpoint, to any
liability or disadvantage which could have a Material Adverse
Effect. Schedule 3.17 to the BPI Disclosure Letter will set
forth all closed litigation matters to which BPI was a party
during the preceding five years, the dates such litigation was
commenced and concluded, and the nature of the resolution thereof
(including amounts paid in settlement or judgment).
3.18 TAXES. BPI has timely filed all requisite federal, state and
other tax returns or extension requests for all fiscal periods ended on or
before the Balance Sheet Date; and except as
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will be set forth on Schedule 3.18 to the BPI Disclosure Letter, there are
no examinations in progress or claims against any of them for federal,
state and other Taxes (including penalties and interest) for any period or
periods prior to and including the Balance Sheet Date and no notice of any
claim for taxes, whether pending or threatened, has been received. All
Taxes, including interest and penalties (whether or not shown on any tax
return) owed by BPI, any member of an affiliated or consolidated group
which includes or included BPI, or with respect to any payment made or
deemed made by BPI herein have been paid. The amounts shown as accruals for
Taxes on the BPI Financial Statements are sufficient for the payment of all
Taxes of the kinds indicated (including penalties and interest) for all
fiscal periods ended on or before that date. Copies of (i) any tax
examinations, (ii) extensions of statutory limitations and (iii) the
federal and local income tax returns and franchise tax returns of BPI for
the last three fiscal years, will be attached as Schedule 3.18 to the BPI
Disclosure Letter.
3.19 NO VIOLATIONS. BPI is not in violation of any of its Charter
Documents. BPI is not in default under any lease, instrument, agreement,
license, or permit set forth on the Schedules to the BPI Disclosure Letter,
or any other material agreement to which it is a party or by which its
properties are bound (the "Material Documents"); and, except as will be set
forth in Schedule 3.19 to the BPI Disclosure Letter, (a) the rights and
benefits of BPI under the Material Documents will not be adversely affected
by the transactions contemplated hereby and (b) the execution of this
Agreement and the performance of the obligations hereunder and the
consummation of the transactions contemplated hereby will not result in any
violation of, or breach of, or constitute a default under, any of the terms
or provisions of the Material Documents or the Charter Documents. Except as
will be set forth on Schedule 3.19 to the BPI Disclosure Letter, none of
the Material Documents requires notice to, or the consent or approval of,
any governmental agency or other third party with respect to any of the
transactions contemplated hereby in order to remain in full force and
effect and consummation of the transactions contemplated hereby will not
give rise to any right to termination, cancellation or acceleration or loss
of any right or benefit. Except as will be set forth on Schedule 3.19 to
the BPI Disclosure Letter, none of the Material Documents prohibits the use
or publication by BPI of the name of any other party to such Material
Document, and none of the Material Documents prohibits or restricts BPI
from freely providing services to any other customer or potential customer
of BPI.
3.20 GOVERNMENT CONTRACTS. Except as will be set forth on Schedule
3.20 to the BPI Disclosure Letter, BPI is not now a party to any
governmental contract subject to price redetermination or renegotiation.
3.21 ABSENCE OF CHANGES. Since April 30, 2000, except as will be set
forth on Schedule 3.21 to the BPI Disclosure Letter, there has not been:
(a) Any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business of BPI;
(b) Any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business
of BPI;
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(c) Any change in the authorized capital of BPI or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or
commitments;
(d) Any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of BPI;
(e) Any increase in the compensation, bonus, sales commissions
or fee arrangement payable or to become payable by BPI to any of their
respective officers, directors, stockholders, employees, consultants
or agents, except for ordinary and customary bonuses and salary
increases for employees in accordance with past practice;
(f) Any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely
affecting the business of BPI;
(g) Any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of BPI to any person,
including, without limitation, any of the stockholders and their
affiliates;
(h) Any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to BPI, including without limitation any
indebtedness or obligation of any stockholder or any affiliate thereof;
(i) Any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of BPI or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j) Any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of business of BPI;
(k) Any waiver of any material rights or claims of BPI;
(l) Any amendment or termination of any Material Documents or
other right to which BPI is a party;
(m) Any transaction by BPI outside the ordinary course of its
business;
(n) Any cancellation or termination of a Material Contract with
a customer or client prior to the scheduled termination date; or
(o) Any other distribution of property or assets by BPI other
than in the ordinary course of business.
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3.22 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. Schedule 3.22 to the BPI
Disclosure Letter will include an accurate list as of the date of the
Agreement of: (i) the name of each financial institution in which BPI has
accounts or safe deposit boxes; (ii) the names in which the accounts or
boxes are held; (iii) the type of account and account number; and (iv) the
name of each person authorized to draw thereon or have access thereto.
Schedule 3.22 to the BPI Disclosure Letter also sets forth the name of each
person, corporation, firm or other entity holding a general or special
power of attorney from BPI and a description of the terms of such power.
3.23 RELATIONS WITH GOVERNMENTS. Except for political contributions
made in a lawful manner which, in the aggregate, do not exceed $10,000 per
year since 1996, BPI has not made, offered or agreed to offer anything of
value to any governmental official, political party or candidate for
government office nor has it otherwise taken any action which would cause
BPI to be in violation of the Foreign Corrupt Practices Act of 1977, as
amended or any law of similar effect.
3.24 DISCLOSURE. This Agreement, including the Schedules and BPI
Disclosure Letter to be provided and the Schedules to be attached thereto,
together with the other information furnished to Winco and WMC by BPI and
the BPI Shareholders in connection herewith, do not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements herein and therein, in light of the circumstances under
which they were made, not misleading.
3.25 PROHIBITED ACTIVITIES. Except as will be set forth on Schedule
3.25 to the BPI Disclosure Letter, BPI has not, between April 30, 2000 and
the date hereof, taken any of the actions (Prohibited Activities) set forth
in Section 6.3.
3.26 NO CONFLICTS. The execution, delivery and performance of this
Agreement by BPI and the consummation by BPI of the transactions
contemplated hereby will not conflict with or result in a breach or
violation of any term or provision of, or (with or without notice or
passage of time, or both) constitute a default under, any indenture,
mortgage, deed of trust, trust (constructive and other), loan agreement or
other agreement or instrument to which BPI is a party or violate the
provisions of any statute, or any order, rule or regulation of any
governmental body or agency or instrumentality thereof, or any order, writ,
injunction or decree of any court or any arbitrator, having jurisdiction
over BPI or the property of BPI.
3.27 CERTAIN BUSINESS RELATIONSHIPS WITH BPI. Except as listed in
Schedule 3.27, neither of the BPI Shareholders nor any relative of any BPI
Shareholder or Affiliate of BPI has been involved in any business
arrangement or relationship with BPI since May 1, 1997, and neither of the
BPI Shareholders, nor any relative of any BPI Shareholder or Affiliate of
BPI owns any asset, tangible or intangible, which is used in BPI's
operations.
3.28 AUTHORIZATION. The representatives of BPI executing this
Agreement have the authority to enter into and bind BPI to the terms of
this Agreement and BPI has the full legal right, power and authority to
enter into this Agreement and the Merger.
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4. REPRESENTATIONS AND WARRANTIES OF WINCO, WMC AND WSC.
Except as will be provided in the Winco Disclosure Letter (as defined
below) to be delivered pursuant to in ▇▇▇▇▇▇▇ ▇▇.▇, ▇▇▇▇▇, ▇▇▇ and WSC
jointly and severally represent and warrant to BPI and the BPI Shareholders
that all of the following representations and warranties in this Section 4
are true at the date of this Agreement and shall be true at the time of
Closing. As used in this Agreement, the "Winco Disclosure Letter" shall
mean the disclosure letter delivered by Winco, WMC and WSC to BPI and the
BPI Shareholders regarding Winco and WMC pursuant to this Section 4. As
used in this Section 4, unless the context otherwise requires, Winco refers
to Winco and all of its wholly-owned subsidiaries.
4.1 DUE ORGANIZATION. Each of Winco, WMC and WSC is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation, and has the requisite power and authority to
carry on its business as it is now being conducted. Each of Winco, WMC and
WSC is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except (i) as
will be set forth on Schedule 4.1 to Winco Disclosure Letter or (ii) where
the failure to be so authorized or qualified would not have a material
adverse effect on the business, operations, properties, assets or condition
(financial or otherwise), of Winco taken as a whole (as used herein with
respect to Winco, or with respect to any other person, a "Material Adverse
Effect"). Schedule 4.1 to the Winco Disclosure Letter will set forth the
jurisdiction in which Winco, WMC and WSC are incorporated and contains a
list of all jurisdictions in which Winco, WMC and WSC are authorized or
qualified to do business. True, complete and correct copies of the
Articles of Incorporation and Bylaws, each as amended, of Winco (the "Winco
Charter Documents") have been made available to BPI. True, complete and
correct copies of the Articles of Incorporation and Bylaws, each as
amended, of WMC and WSC (the "WMC or WSC Charter Documents") have been made
available to BPI. The stock records of Winco, WMC and WSC, as heretofore
made available to BPI, are correct and complete in all material respects.
There are no minutes or other records or proceedings of Winco, WMC and WSC
which have not been made available to BPI, and all of such minutes or other
records of proceedings are correct and complete in all respects.
4.2 SUBSIDIARIES. The names and jurisdiction of incorporation of the
subsidiaries of Winco are set forth in Schedule 4.2. WMC and WSC have no
subsidiaries.
4.3 CAPITAL STRUCTURE. The authorized capital stock of Winco and WMC
is as set forth in Section 1.6. All of the issued and outstanding shares
of the capital stock of Winco and WMC have been duly authorized and are
validly issued, fully paid and non-assessable. All of the outstanding
shares of common stock have been duly authorized and are validly issued,
fully paid and non-assessable. Winco does not have any preferred stock.
Except as listed in Schedule 4.3, each of Winco and WMC has no common stock
or other shares of capital stock reserved for or otherwise subject to
issuance. Except as listed in Schedule 4.3 or as set forth above, there
are no pre-emptive or other outstanding rights, options, warrants,
conversion rights, stock appreciation
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rights, redemption rights, repurchase rights, agreements, arrangements or
commitments to issue or sell any shares of capital stock or other
securities of WMC or Winco or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any person a right to
subscribe for or acquire, any securities of WMC or Winco, and no securities
or obligations evidencing such rights are authorized, issued or
outstanding. Each of WMC and Winco does not have outstanding any bonds,
debentures, notes or other debt obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote). There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to each
of WMC and Winco. There are no voting trusts, proxies or other agreements
or understandings with respect to the voting of the capital stock of each
of WMC and Winco.
4.4 PREDECESSOR STATUS; ETC. Set forth in Schedule 4.4 to Winco
Disclosure Letter will contain an accurate list of all names of all
predecessor companies of Winco since May 1, 1994, including the names of
any entities acquired by Winco (by stock purchase, merger or otherwise) or
owned by Winco or from whom Winco previously acquired material assets, in
any case, from the earliest date upon which any person acquired his or her
stock in Winco. Except as will be disclosed on Schedule 4.4 to Winco
Disclosure Letter, Winco has not been, within such period of time, a
subsidiary or division of another corporation or a part of an acquisition
which was later rescinded.
4.5 SPIN-OFF BY WINCO. Except as contemplated by Section 10 hereof
and as will be set forth on Schedule 4.5 to Winco Disclosure Letter, there
has not been any sale, spin-off or split-up of material assets of either
Winco or any other person or entity that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, Winco ("Affiliates") since its inception.
4.6 FINANCIAL STATEMENTS. Schedule 4.6 to Winco Disclosure Letter
will include copies of the following financial statements (the "Winco
Financial Statements") of Winco: Winco's audited Balance Sheets as of
September 30, 1999 and 1998 and audited Statements of Income and
Comprehensive Income, Stockholders' Equity and Cash Flows for each of the
fiscal years ended September 30, 1999 and 1998 and, unaudited Balance Sheet
as of June 30, 2000 and unaudited Statements of Income and Comprehensive
Income, Stockholders' Equity and Cash Flows for the nine month period June
30, 2000 (June 30, 2000 being hereinafter referred to as the "Balance Sheet
Date"). The Winco Financial Statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated (except as will be noted
thereon or on Schedule 4.6 to Winco Disclosure Letter). Except as will be
set forth on Schedule 4.6 to Winco Disclosure Letter, such Balance Sheets
present fairly in all material respects the financial position of Winco as
of the dates indicated thereon, and such Statements of Income and
Comprehensive Income, Stockholders' Equity and Cash Flows present fairly in
all material respects the results of operations for the periods indicated
thereon, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are
not expected to be material in amount.
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4.7 LIABILITIES AND OBLIGATIONS. Schedule 4.7 to Winco Disclosure
Letter will include accurate lists as of the Balance Sheet Date of (i) all
material liabilities of Winco which are not reflected on the Balance Sheet
of Winco at the Balance Sheet Date or otherwise reflected in Winco
Financial Statements at the Balance Sheet Date which by their nature would
be required in accordance with GAAP to be reflected in the Balance Sheet,
and (ii) all loan agreements, indemnity or guaranty agreements, bonds,
mortgages, liens, pledges or other security agreements. Except as will be
set forth on Schedule 4.7 to Winco Disclosure Letter, since the Balance
Sheet Date Winco has not incurred any material liabilities of any kind,
character and description, whether accrued, absolute, secured or unsecured,
contingent or otherwise, other than liabilities incurred in the ordinary
course of business. Schedule 4.7 to Winco Disclosure Letter will also
include, in the case of those contingent liabilities related to pending or
threatened litigation, or other liabilities which are not fixed or
otherwise accrued or reserved, a good faith and reasonable estimate of the
maximum amount which Winco reasonably expects will be payable. For each
such contingent liability or liability for which the amount is not fixed or
is contested, Winco has provided to BPI and the BPI Shareholders the
following information:
(a) A summary description of the liability together with the
following:
(i) copies of all relevant documentation relating thereto;
(ii) amounts claimed and any other action or relief sought;
and
(iii) name of claimant and all other parties to the claim,
suit or proceeding;
(b) The name of each court or agency before which such claim,
suit or proceeding is pending; and
(c) The date such claim, suit or proceeding was instituted; and
(d) A good faith and reasonable estimate of the maximum amount,
if any, which is likely to become payable with respect to each such
liability. If no estimate is provided, the estimate shall for purposes
of this Agreement be deemed to be zero.
Adequate provision shall be made for all debts, obligations, or other
liabilities of Winco and the spin-off of Winco's assets and liabilities to
WSC shall not constitute a fraudulent conveyance or otherwise violate any
contract or provision of law.
4.8 PERMITS AND INTANGIBLES.
(a) Winco holds all licenses, franchises, permits and other
governmental authorizations the absence of any of which could have a
Material Adverse Effect on Winco's business and Schedule 4.8 to Winco
Disclosure Letter will include an accurate list and summary
description of all such licenses, franchises, permits and other
governmental authorizations, including permits (it being understood
and agreed that a list
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of all environmental permits and other environmental approvals will be
set forth on Schedule 4.9 to Winco Disclosure Letter), titles
(including motor vehicle titles and current registrations), fuel
permits, licenses, franchises and certificates, as well as
(a) registered or unregistered trademarks, trade names, patents,
patent applications and inventions and discoveries that may be
patentable, (b) copyrights owned or held by Winco or any of its
employees (including interests in software or other technology
systems, programs and intellectual property). The licenses,
franchises, permits and other governmental authorizations will be
listed on Schedules 4.8 and 4.9 to Winco Disclosure Letter and are
valid, and Winco has not received any notice that any governmental
authority intends to cancel, terminate or not renew any such license,
franchise, permit or other governmental authorization. Winco has
conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in the
licenses, franchises, permits and other governmental authorizations
which will be listed on Schedules 4.8 and 4.9 of Winco Disclosure
letter and is not in violation of any of the foregoing except where
such non-compliance or violation would not have a Material Adverse
Effect on Winco. Except as will be specifically provided in Schedule
4.8 to Winco Disclosure Letter, the transactions contemplated by this
Agreement will not result in a default under or a breach or violation
of, or adversely affect the rights and benefits afforded to Winco by,
any such licenses, franchises, permits or government authorizations.
(b) The patents, the marks and copyrights, as well as the know
how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans and
drawings owned, used or licensed by Winco (collectively, the "Trade
Secrets") are all those necessary to enable Winco to conduct and to
continue to conduct its business as it is currently conducted.
Schedule 4.8 of Winco Disclosure Letter will also contain a
description of all material Trade Secrets owned or used by Winco.
Except as will be set forth on Schedule 4.8 to Winco Disclosure Letter
(a) all of the patents, marks, copyrights and Trade Secrets
(collectively, the "Intellectual Property") are owned, or used under
valid licenses by Winco, and are free and clear of all liens and other
adverse claims; (b) Winco has not infringed on or misappropriated, is
not now infringing on or misappropriating, and has not received any
notice that it is infringing on, misappropriating, or otherwise
conflicting with the intellectual property rights of any third
parties; (c) there is no claim pending or threatened against Winco
with respect to the alleged infringement or misappropriation by Winco
or a conflict with, any intellectual property rights of others; (d)
the operation of any aspect of the business in the manner in which it
has heretofore been operated or is presently operated does not give
rise to any such infringement or misappropriation; and (e) there is no
infringement or misappropriation of the Intellectual Property by a
third party or claim, pending or threatened, against any third party
with respect to the alleged infringement or misappropriation of the
Intellectual Property by such third party.
4.9 ENVIRONMENTAL MATTERS. Except as will be set forth on Schedule
4.9 to Winco Disclosure Letter, and except where any failure to comply or
action would not have a Material Adverse Effect, (i) Winco has complied
with and is in compliance with all Federal, state, local
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and foreign statutes (civil and criminal), laws, ordinances, regulations,
rules, notices, permits, judgments, orders and decrees applicable to any of
them or any of their respective properties, assets, operations and
businesses relating to environmental protection (collectively
"Environmental Laws") including, without limitation, Environmental Laws
relating to air, water, land and the generation, storage, use, handling,
transportation, treatment or disposal of Hazardous Wastes and Hazardous
Substances including petroleum and petroleum products (as such terms are
defined in any applicable Environmental Laws); (ii) Winco has obtained and
adhered to all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes and
Hazardous Substances, an accurate list of all of which permits and
approvals will be set forth on Schedule 4.9 to Winco Disclosure Letter, and
have reported to the appropriate authorities, to the extent required by all
Environmental Laws, all past and present sites owned and operated by Winco
where Hazardous Wastes or Hazardous Substances have been treated, stored,
disposed of or otherwise handled; (iii) there have been no releases or
threats of releases (as defined in Environmental Laws) at, from, in or on
any property owned or operated by Winco except as permitted by
Environmental Laws; (iv) there is no on-site or off-site location to which
Winco has transported or disposed of Hazardous Wastes and Hazardous
Substances or arranged for the transportation of Hazardous Wastes and
Hazardous Substances, which site is the subject of any Federal, state,
local or foreign enforcement action or any other investigation which is
reasonably likely to lead to any claim against Winco for any clean-up cost,
remedial work, damage to natural resources, property damage or personal
injury, including, but not limited to, any claim under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended;
and (v) Winco has no contingent liability in connection with any release of
any Hazardous Waste or Hazardous Substance into the environment. These
representations shall also be deemed to have been made subsequent to
Closing by WSC and shall survive Closing.
4.10 PERSONAL PROPERTY. Schedule 4.10 to Winco Disclosure Letter will
include an accurate list of (i) all personal property owned by Winco with
an individual value in excess of $50,000 acquired since the Balance Sheet
Date and (ii) all leases and agreements in respect of personal property,
including, in the case of each of (i) and (ii), (1) true, complete and
correct copies of all such leases and (2) an indication as to which assets
are currently owned, or were formerly owned, by stockholders, relatives of
stockholders, or Affiliates of Winco. Except as will be set forth on
Schedule 4.10 to Winco Disclosure Letter, (x) all material personal
property used by Winco in its business is either owned by Winco or leased
by Winco pursuant to a lease will be included on Schedule 4.10 to Winco
Disclosure Letter, (y) all of the personal property to be listed on
Schedule 4.10 to Winco Disclosure Letter is in good working order and
condition, ordinary wear and tear excepted and (z) all leases and
agreements to be included on Schedule 4.10 to Winco Disclosure Letter are
in full force and effect and constitute valid and binding agreements of the
parties (and their successors) thereto in accordance with their respective
terms.
4.11 MATERIAL CONTRACTS AND COMMITMENTS. Schedule 4.11 to Winco
Disclosure Letter will include an accurate list as of or on the date
hereof, of all material written or oral leases, agreements or other
contracts or legally binding contractual rights or contractual obligations
or contractual commitments relating to or in any way affecting the
operation or ownership of the
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business of Winco (the "Material Contracts"), including but not limited,
those of a type described below:
(a) Any consulting agreement, employment agreement, change-in-
control agreement, and collective bargaining arrangements with any
labor union and any such agreements currently in negotiation or proposed;
(b) Any contract for capital expenditures or the acquisition or
construction of fixed assets in excess of $50,000;
(c) Any contract for the purchase, maintenance or acquisition,
or the sale or furnishing, of materials, supplies, merchandise,
products, machinery, equipment, parts or other property or services
(except if such contract is made in the ordinary course of business
and requires aggregate future payments of less than $50,000);
(d) Any contract other than trade payables in the ordinary
course of business relating to the borrowing of money, or the guaranty
of another person's borrowing of money, including, without limitation,
any notes, mortgages, indentures and other obligations, guarantees of
performance, agreements and instruments for or relating to any lending
or borrowing, including assumed indebtedness;
(e) Any contract granting any person a lien on all or any part
of the assets of Winco;
(f) Any contract for the cleanup, abatement or other actions in
connection with hazardous materials as defined under any Environmental
Laws, the remediation of any existing environmental liabilities or
relating to the performance of any environmental audit or study;
(g) Any contract granting to any person an option or a first
refusal, first-offer or similar preferential right to purchase or
acquire any material assets of Winco;
(h) Any contract with any agent, distributor or representative
which is not terminable by Winco upon ninety calendar days' or less
notice without penalty;
(i) Any contract under which Winco is (1) a lessee or sublessee
of any machinery, equipment, vehicle or other tangible personal
property, or (2) a lessor of any tangible personal property owned by
Winco, in either case having an original value in excess of $50,000;
(j) Any contract under which Winco has granted or received a
license or sublicense or under which it is obligated to pay or has the
right to receive a royalty, license fee or similar payment;
(k) Any contract concerning any Affiliates;
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(l) Any contract providing for the indemnification or holding
harmless of any officer, director, employee or other person, other
than as provided in the by-laws of Winco;
(m) Any contract for purchase or sale by Winco or the granting
of any options with respect to, or providing for any labor, services
or materials (including brokerage or management services) involving
any real property on which Winco conducts any aspect of its business
involving aggregate future payments of more than $50,000;
(n) Any contract limiting, restricting or prohibiting Winco from
conducting business anywhere in the United States or elsewhere in the
world;
(o) Any joint venture or partnership agreement;
(p) Any lease, sublease or associated agreements relating to the
property leased by Winco;
(q) Any material contract requiring prior notice, consent or
other approval upon a change of control in the equity ownership of
Winco, which contracts shall be separately identified on Schedule 3.11
to Winco Disclosure Letter;
(r) Any contract with a customer of Winco involving work to be
performed or product to be delivered, in each case subsequent to the
Balance Sheet Date, in excess of $50,000;
(s) Any other contract, whether or not made in the ordinary
course of business, which involves future payments in excess of $50,000.
Winco has provided BPI and the BPI Shareholders a true and complete copy of
each written Material Contract and a true and complete summary of each oral
Material Contract, in each case including all amendments or other
modifications thereto. Except as will be set forth on Schedule 4.11 to
Winco Disclosure Letter, each Material Contract is a valid and binding
obligation of, and enforceable in accordance with its terms against, Winco,
and the other parties thereto, and is in full force and effect, subject
only to bankruptcy, reorganization, receivership and other laws affecting
creditors' rights generally. Except as will be set forth on Schedule 4.11
of Winco Disclosure Letter, Winco has performed all obligations required to
be performed by it as of the date hereof and will have performed all
obligations required to be performed by it as of the Closing Date under
each Material Contract and neither Winco, nor any other party to any
Material Contract is in breach or default thereunder, and there exists no
condition which would, with or without the lapse of time or the giving of
notice, or both, constitute a breach or default thereunder. Winco has not
been notified that any party to any Material Contract intends to cancel,
terminate, not renew, or exercise an option under any Material Contract,
whether in connection with the transactions contemplated hereby or otherwise.
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4.12 REAL PROPERTY. Schedule 4.12 to Winco Disclosure Letter shall
set forth a correct and complete list, and a brief description of, all real
property leased by Winco (the "Leased Real Property"), and all facilities
thereon. Except as lessee of Leased Real Property, Winco is not a lessee
under or otherwise a party to any lease, sublease, license, concession or
other agreement, whether written or oral, pursuant to which another person
or entity has granted to Winco the right to use or occupy all or any
portion of any real property. Winco does not have an ownership interest in
any real property.
Winco has, assuming good title in the landlord, a valid leasehold
interest in the Leased Property, in each case free and clear of all liens,
assessments or restrictions (including, without limitation, inchoate liens
arising out of the provision of labor, services or materials to any such
Real Property) other than (a) mortgages shown on Winco Financial Statements
as securing specified liabilities or obligations, with respect to which no
default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) liens for current taxes not yet due, and
(c) minor imperfections of title, such as utility and access easements that
do not impair the intended use of the Real Property, none of which is
substantial in amount, materially detracts from the value or impairs the
use of the property subject thereto, or impairs the operations of Winco,
and zoning laws and other land use restrictions or restrictive covenants
that do not materially impair the present use of the property subject
thereto. The Real Property constitutes all the real properties reflected
on Winco Financial Statements or used or occupied by Winco in connection
with its business or otherwise.
With respect to the Leased Real Property, except as will be reflected
on Schedule 4.12 to Winco Disclosure Letter:
(a) Winco is in exclusive possession thereof and no easements,
licenses or rights are necessary to conduct business thereon in
addition to those which exist as of the date hereof;
(b) No portion thereof is subject to any pending condemnation
proceeding or proceeding by any public or quasi-public authority
materially adverse to the Leased Real Property and there is no
threatened condemnation or proceeding with respect thereto;
(c) (i) the buildings, plants, improvements, structures and
fixtures at the Leased Real Property, including, without limitation,
heating, ventilation and air conditioning systems, roofs, foundations
and floors, are in good operating condition and repair; (ii) the
Leased Real Property is not in violation of any health, safety,
building, or environmental ordinances, laws, codes or regulations; nor
has any notice of any claimed violation of any such ordinances, laws,
codes or regulations been served on Winco;
(d) The Leased Real Property is supplied with utilities and
other third-party services, such as water, sewer, electricity, gas,
roads, rail service and garbage collection, necessary for the current
operation of the business and such Leased Real Property is maintained
in all material respects in accordance with all laws applicable to
Winco or the Leased Real Property;
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(e) Winco is not a party to any written or oral agreement or
undertaking with owners or users of properties adjacent to the Leased
Real Property relating to the use, operation or maintenance of such
facility or any adjacent real property;
(f) Winco is not a party to any lease, sublease, license,
concession or other agreement, whether written or oral, pursuant to
which Winco has granted to any party or parties the right to use or
occupy all or any portion of the Leased Real Property;
(g) To the extent that Winco has responsibility under the
lease(s) for the Leased Real Property for compliance with the
provisions of the ADA, all alterations, rehabilitations, structures,
or improvements in the Leased Property comply with the ADA;
(h) (i) There are no material defects in any improvements on or
to the Leased Real Property; (ii) the Leased Real Property is free
from regulated quantities of asbestos; and (iii) the Leased Real
Property is free from flooding and leaks.
4.13 INSURANCE. Schedule 4.13 to Winco Disclosure Letter shall
include (i) an accurate list of all insurance policies carried by Winco
since July 1, 1995, and (ii) an accurate list of all insurance loss claims
or workers compensation claims received since July 1, 1995 and complete
copies of the foregoing items have been delivered to the BPI Shareholders.
Such insurance policies evidence all of the insurance that Winco has been
required to carry pursuant to all of its contracts and other agreements and
pursuant to all applicable laws. All insurance policies for the current
policy periods are in full force and effect and shall remain in full force
and effect through the Closing Date. Since July 1, 1995, no insurance
carried by Winco has been canceled by the insurer and Winco has not been
denied coverage.
4.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
Schedule 4.14 to Winco Disclosure Letter shall include an accurate list of
(i) all officers, directors and key employees of Winco, (ii) all employment
agreements with such officers, directors and key employees and the rate of
compensation (and the portions thereof attributable to salary, bonus and
other compensation, respectively) of each of such persons as of the Balance
Sheet Date and the date hereof. Winco has provided to BPI true, complete
and correct copies of any employment agreements for persons to be listed on
Schedule 4.14 to Winco Disclosure Letter. Since the Balance Sheet Date,
there have been no increases in the compensation payable or any special
bonuses to any officer, director, key employee or other employee, except
ordinary salary increases implemented on a basis consistent with past
practices. Except as will be set forth on Schedule 4.14 to Winco
Disclosure Letter, (i) Winco is not bound by or subject to (and none of its
assets or properties is bound by or subject to) any arrangement with any
labor union, (ii) no employees of Winco are represented by any labor union
or covered by any collective bargaining agreement, (iii) no campaign to
establish such representation is in progress and (iv) there is no pending
or threatened labor dispute involving Winco and any group of its employees
nor has Winco experienced any labor interruptions over the past three
years. Winco believes its relationship with its employees to be good.
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4.15 EMPLOYEE BENEFIT PLANS. Schedule 4.15 to Winco Disclosure Letter
will set forth all employee benefit plans of Winco, including all
employment agreements and other agreements or arrangements containing
"golden parachute" or other similar provisions, and deferred compensation
agreements. Winco has delivered to BPI true, complete and correct copies
of such plans, agreements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except for the employee benefit plans, if any, to be described on Schedule
4.15 to Winco Disclosure Letter, Winco does not sponsor, maintain or
contribute to any plan program, fund or arrangement that constitutes an
"employee pension benefit plan," nor has Winco any obligation to contribute
to or accrue or pay any benefits under any deferred compensation or
retirement funding arrangement on behalf of any employee or employees (such
as, for example, and without limitation, any individual retirement account
or annuity, any "excess benefit plan" (within the meaning of Section 3(36)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall
have the same meaning as is given that term in Section 3(2) of ERISA.
Winco has not sponsored, maintained or contributed to any employee pension
benefit plan other than the plans to be set forth on Schedule 4.15 to Winco
Disclosure Letter, nor is Winco required to contribute to any retirement
plan pursuant to the provisions of any collective bargaining agreement
establishing the terms and conditions or employment of any employees of
Winco. All accrued contribution obligations of Winco with respect to any
plan to be listed on Schedule 4.15 to Winco Disclosure Letter have either
been fulfilled in their entirety or are fully reflected on the balance
sheet of Winco as of the Balance Sheet Date.
4.16 COMPLIANCE WITH ERISA. All plans to be listed on Schedule 4.15
to Winco Disclosure Letter that are intended to qualify (the "Qualified
Plans") under Section 401(a) of the Code are, and have been so qualified
and have been determined by the Internal Revenue Service to be so
qualified, and copies of such determination letters shall be included as
part of Schedule 4.15 to Winco Disclosure Letter. Except as will be
disclosed on Schedule 4.16 to Winco Disclosure Letter, all reports and
other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits or tax returns) have been timely
filed or distributed, and copies thereof will be included as part of
Schedule 4.15 to Winco Disclosure Letter. Neither Winco, WMC, WSC or any
Winco stockholder has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA. No plan to
be listed in Schedule 4.15 to Winco Disclosure Letter has incurred an
accumulated funding deficiency, as defined in Section 412(a) of the Code
and Section 302(1) of ERISA; and Winco has not incurred any liability for
excise tax or penalty due to the Internal Revenue Service nor any liability
to the Pension Benefit Guaranty Corporation.
(a) There have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified Plan intended to
qualify under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service;
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(b) No plan to be listed in Schedule 4.15 to Winco Disclosure
Letter, subject to the provisions of Title IV of ERISA, has been
terminated;
(c) There have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any such plan to be
listed in Schedule 4.15 to Winco Disclosure Letter;
(d) Winco has not incurred liability under Section 4062 of
ERISA; and
(e) No circumstances exist pursuant to which Winco could have
any direct or indirect liability whatsoever (including, but not
limited to, any liability to any multiemployer plan or the PBGC under
Title IV of ERISA or to the Internal Revenue Service for any excise
tax or penalty, or being subject to any statutory lien to secure
payment of any such liability) with respect to any plan now or
heretofore maintained or contributed to by any entity other than Winco
that is, or at any time was, a member of a "controlled group" (as
defined in Section 412(n)(6)(B) of the Code) that includes Winco.
4.17 CONFORMITY WITH LAW; LITIGATION.
(a) Except to the extent to be set forth on Schedule 4.17 to
Winco Disclosure Letter, Winco is not in violation of any law or
regulation or any order of any court or Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it which would have a
Material Adverse Effect.
(b) Except as to be set forth on Schedule 4.17 to Winco
Disclosure Letter (which shall disclose the parties to, nature of and
relief sought for each matter to be disclosed), other than collection
actions by Winco, in the ordinary course of business on its own
behalf, none of which is greater than $25,000 and which in the
aggregate do not exceed $50,000:
(i) There is no suit, action, proceeding, investigation,
claim or order pending or threatened against Winco, or with
respect to any Employee Plan, or any fiduciary of any such plan
(or pending or threatened against any of the officers, directors
or employees of Winco with respect to the business or currently
proposed business activities of Winco, or to which Winco is
otherwise a party, or which may have or is likely to have a
Material Adverse Effect, before any court, or before any
governmental authority, department, commission, bureau, agency or
other governmental department or arbitrator (collectively,
"Claims"), nor is there any basis for any such Claims.
(ii) Except as to be set forth in Schedule 4.17(b) to the
Winco Disclosure Letter, Winco is not subject to any unsatisfied
or continuing judgment, order or decree of any court or
governmental authority, and Winco is not otherwise exposed, from
a legal standpoint, to any liability or disadvantage which
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could have a Material Adverse Effect. Schedule 4.17 to Winco
Disclosure Letter shall set forth all closed litigation matters
to which Winco was a party during the preceding five years, the
dates such litigation was commenced and concluded, and the nature
of the resolution thereof (including amounts paid in settlement
or judgment).
4.18 TAXES. Winco has timely filed all requisite federal, state and
other tax returns or extension requests for all fiscal periods ended on the
Balance Sheet Date; and except as will be set forth on Schedule 4.18 to
Winco Disclosure Letter, there are no examinations in progress or claims
against any of them for federal, state and other Taxes (including penalties
and interest) for any period or periods prior to and including the Balance
Sheet Date and no notice of any claim for taxes, whether pending or
threatened, has been received. All Taxes, including interest and penalties
(whether or not shown on any tax return) owed by Winco, any member of an
affiliated or consolidated group which includes or included Winco, or with
respect to any payment made or deemed made by Winco herein have been paid.
The amounts shown as accruals for Taxes on Winco Financial Statements are
sufficient for the payment of all Taxes of the kinds indicated (including
penalties and interest) for all fiscal periods ended on or before that
date. Copies of (i) any tax examinations, (ii) extensions of statutory
limitations and (iii) the federal and local income tax returns and
franchise tax returns of Winco for the last three fiscal years have been
made available to BPI and the BPI Shareholders.
4.19 NO VIOLATIONS. Winco is not in violation of any of its Charter
Documents. Winco is not in default under any lease, instrument, agreement,
license, or permit to be set forth on the Schedules to Winco Disclosure
Letter, or any other material agreement to which it is a party or by which
its properties are bound (the "Material Documents"); and, except as to be
set forth in Schedule 4.19 to Winco Disclosure Letter, (a) the rights and
benefits of Winco under the Material Documents will not be adversely
affected by the transactions contemplated hereby and (b) the execution of
this Agreement and the performance of the obligations hereunder and the
consummation of the transactions contemplated hereby will not result in any
violation of, or breach of, or constitute a default under, any of the terms
or provisions of the Material Documents or the Charter Documents. Except as
to be set forth on Schedule 4.19 to Winco Disclosure Letter, none of the
Material Documents requires notice to, or the consent or approval of, any
governmental agency or other third party with respect to any of the
transactions contemplated hereby in order to remain in full force and
effect and consummation of the transactions contemplated hereby will not
give rise to any right to termination, cancellation or acceleration or loss
of any right or benefit. Except as to be set forth on Schedule 4.19 to
Winco Disclosure Letter, none of the Material Documents prohibits the use
or publication by Winco of the name of any other party to such Material
Document, and none of the Material Documents prohibits or restricts Winco
from freely providing services to any other customer or potential customer
of Winco.
4.20 GOVERNMENT CONTRACTS. Except as to be set forth on Schedule 4.20
to Winco Disclosure Letter, Winco is not now a party to any governmental
contract subject to price redetermination or renegotiation.
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4.21 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as to
be set forth on Schedule 4.21 to Winco Disclosure Letter, there has not been:
(a) Any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business of
Winco;
(b) Any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business
of Winco;
(c) Any change in the authorized capital of Winco or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or
commitments;
(d) Any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of Winco;
(e) Any increase in the compensation, bonus, sales commissions
or fee arrangement payable or to become payable by Winco to any of
their respective officers, directors, stockholders, employees,
consultants or agents, except for ordinary and customary bonuses and
salary increases for employees in accordance with past practice;
(f) Any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely
affecting the business of Winco;
(g) Any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of Winco to any person,
including, without limitation, any of the stockholders and their
affiliates;
(h) Any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to Winco, including without limitation any
indebtedness or obligation of any stockholder or any affiliate
thereof;
(i) Any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of Winco or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j) Any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of business of Winco;
(k) Any waiver of any material rights or claims of Winco;
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(l) Any amendment or termination of any Material Documents or
other right to which Winco is a party;
(m) Any transaction by Winco outside the ordinary course of its
business;
(n) Any cancellation or termination of a Material Contract with
a customer or client prior to the scheduled termination date; or
(o) Any other distribution of property or assets by Winco other
than in the ordinary course of business.
4.22 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. Schedule 4.22 to Winco
Disclosure Letter shall include an accurate list as of the date of the
Agreement of: (i) the name of each financial institution in which Winco
has accounts or safe deposit boxes; (ii) the names in which the accounts or
boxes are held; (iii) the type of account and account number; and (iv) the
name of each person authorized to draw thereon or have access thereto.
Schedule 4.22 to Winco Disclosure Letter shall also set forth the name of
each person, corporation, firm or other entity holding a general or special
power of attorney from Winco and a description of the terms of such power.
4.23 RELATIONS WITH GOVERNMENTS. Except for political contributions
made in a lawful manner which, in the aggregate, do not exceed $10,000 per
year since 1996, Winco has not made, offered or agreed to offer anything of
value to any governmental official, political party or candidate for
government office nor has it otherwise taken any action which would cause
Winco to be in violation of the Foreign Corrupt Practices Act of 1977, as
amended or any law of similar effect.
4.24 DISCLOSURE. This Agreement, including the Schedules and Winco
Disclosure Letter to be provided and the Schedules to be attached thereto,
together with the other information furnished to BPI and the BPI
Shareholders by Winco, WSC and WMC in connection herewith, do not contain
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements herein and therein, in light of the
circumstances under which they were made, not misleading.
4.25 PROHIBITED ACTIVITIES. Except as to be set forth on Schedule
4.25 to Winco Disclosure Letter, neither Winco, WSC or WMC have, between
the Balance Sheet Date and the date hereof, taken any of the actions
(Prohibited Activities) set forth in Section 6.3.
4.26 NO CONFLICTS. The execution, delivery and performance of this
Agreement by Winco, WSC and WMC and the consummation by Winco, WSC and WMC
of the transactions contemplated hereby will not conflict with or result in
a breach or violation of any term or provision of, or (with or without
notice or passage of time, or both) constitute a default under, any
indenture, mortgage, deed of trust, trust (constructive and other), loan
agreement or other agreement or instrument to which Winco is a party or
violate the provisions of any statute, or any order, rule or regulation of
any governmental body or agency or instrumentality thereof, or any
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order, writ, injunction or decree of any court or any arbitrator, having
jurisdiction over Winco, WSC, WMC or any of their property.
4.27 CERTAIN BUSINESS RELATIONSHIPS. Except as listed in Schedule
4.27, no current officer or director of Winco, WSC or WMC has been involved
in any business arrangement or relationship with Winco, WSC or WMC since
July 1, 1995, and none of the officers or directors, nor any relative of
any officer or director or affiliate of an officer or director of such
companies, owns any asset, tangible or intangible, which is used in their
operations.
4.28 AUTHORIZATION. The representatives of Winco, WSC and WMC
executing this Agreement have the authority to enter into and bind Winco,
WSC and WMC to the terms of this Agreement and Winco, WSC and WMC have the
full legal right, power and authority to enter into this Agreement and the
Merger, subject to the approval of the shareholders of Winco as provided in
Sections 8.4 and 9.4.
5. CERTIFICATE OF THE BPI SHAREHOLDERS CONCERNING THE TRANSACTION.
Prior to Closing, BPI shall obtain, in writing, a Certificate from
each BPI Shareholder to the effect that all of the following
representations and warranties in this Section 5 are true at the date of
this Agreement and shall be true at the time of Closing. Such Certificate
shall be delivered to Winco and WMC at Closing.
5.1 AUTHORIZATION. All action on the part of each BPI Shareholder
necessary for the authorization, execution and delivery of this Agreement
by BPI and the performance of all obligations of BPI hereunder has been
taken, and this Agreement constitutes a valid and legally binding
obligation of BPI, enforceable in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors'
rights generally, and (ii) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies.
5.2 TITLE TO THE SHARES. Each BPI Shareholder owns, and is
transferring to Winco at the Closing, good, valid and marketable title to
the number of Shares set forth opposite the name of the BPI Shareholder in
Section 1.1 free and clear of all liens, claims, options and encumbrances
whatsoever. There are no outstanding options, warrants or rights to
purchase or acquire any of the Shares of the Shareholder or any of the
capital stock of BPI.
5.3 PURCHASE ENTIRELY FOR HIS OWN ACCOUNT. The Winco securities will
be acquired for investment for the BPI Shareholder's own account, not as a
nominee or agent, and not with the view to the resale or distribution of
any part thereof, and the BPI Shareholder has no present intention of
selling, granting any participation in, or otherwise distributing Winco
securities. The BPI Shareholder has no contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to
such person with respect to any of the securities of Winco.
Notwithstanding the foregoing, it is understood that the BPI Shareholders
may transfer a part of the Winco securities to be received by them in the
Merger to CeBourn, Ltd., provided that
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CeBourn, Ltd. executes and delivers a representation of investment intent
letter to Winco which includes the representations and warranties in this
Section 5.
5.4 DISCLOSURE OF INFORMATION. Each BPI Shareholder has received and
had the opportunity to review the reports filed by Winco with the
Securities and Exchange Commission and has had the opportunity to ask
questions of, and receive answers from, representatives of Winco to obtain
additional information regarding Winco.
5.5 RESTRICTIONS ON TRANSFER.
(a) The securities of Winco that the BPI Shareholders will
acquire have not been registered under the Securities Act of 1933, as
amended (the "Securities Act") and, accordingly, such securities will
not be fully transferable except as permitted under various exemptions
contained in the Securities Act or upon satisfaction of the
registration and prospectus delivery requirements of the Securities
Act. The BPI Shareholders must bear the economic risk of his
investment in such securities for an indefinite period of time as such
securities have not been registered under the Securities Act and
therefore cannot be sold unless they are subsequently registered or an
exemption from registration is available. The BPI Shareholders are
Accredited Investors as defined under Rule 501(a) of the Securities
Act and are acquiring the securities for investment purposes only, for
their own account, and not as nominee or agent for any other person,
and not with the view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act.
It is understood that the securities of Winco to be delivered to
the BPI Shareholders may be transferred pursuant to an effective
registration statement under the Securities Act and nothing herein
shall preclude the filing of a registration statement subsequent to
the Closing Date for a registration regarding these securities.
(b) The certificates evidencing the securities of Winco he will
acquire pursuant to this Agreement, and each instrument or certificate
issued in transfer thereof, will bear substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES
ONLY AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF,
AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES OR AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE. IF THE SECURITIES
ARE TO BE SOLD OR TRANSFERRED PURSUANT TO AN EXEMPTION
THE CORPORATION MAY REQUIRE AN
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OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER STATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND WILL NOT VIOLATE SUCH ACT
OR ANY OTHER APPLICABLE SECURITIES LAWS.
(c) Each BPI Shareholder understands a notation on the records
of Winco and its transfer agent will be made in order to implement the
restrictions on transfer set forth in this Section 5.6.
6. COVENANTS OF BPI PRIOR TO CLOSING.
6.1 ACCESS AND COOPERATION; DUE DILIGENCE. Between the date of this
Agreement and the Closing Date, BPI will afford to the officers and
authorized representatives of Winco and WMC access to all of the sites,
properties, books and records of BPI and will furnish Winco and WMC such
additional financial and operating data and other information as to the
business and properties of BPI as Winco and WMC may from time to time
reasonably request. BPI will cooperate with Winco and WMC, their
representatives, auditors and counsel in the preparation of any documents
or other material which may be required in connection with any documents or
materials required by this Agreement or necessary to complete the
transactions contemplated hereunder
6.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Closing, BPI will, except as will be set forth on
Schedule 6.2 to the BPI Disclosure Letter:
(a) Carry on its business in substantially the same manner as it
has heretofore and not introduce any material new method of
management, operation or accounting;
(b) Maintain its properties and facilities in as good working
order and condition as at present, ordinary wear and tear excepted;
(c) Perform in all material respects all of its obligations
under agreements relating to or affecting its respective assets,
properties or rights;
(d) Use all reasonable efforts to keep in full force and effect
present insurance policies or other comparable insurance coverage;
(e) Use its reasonable efforts to maintain and preserve its
business organization intact, retain its present key employees and
maintain its relationships with suppliers, customers and others having
business relations with it;
(f) Maintain compliance with all material permits, laws, rules
and regulations, consent orders, and all other orders of applicable
courts, regulatory agencies and similar governmental authorities;
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(g) Maintain present debt and lease instruments and not enter
into new or amended debt or lease instruments, without the knowledge
and consent of Winco (which consent shall not be unreasonably
withheld), provided that debt and/or lease instruments may be replaced
without the consent of Winco if such replacement instruments are on
terms at least as favorable to BPI as the instruments being replaced; and
(h) Maintain or reduce present salaries and commission levels
for all officers, directors, employees and agents except for ordinary
and customary bonus and salary increases for employees in accordance
with past practices.
(i) BPI may arrange and close debt financing or raise equity
funding in an aggregate amount of not more than $3,000,000.00.
6.3 PROHIBITED ACTIVITIES. Between the date hereof and the Closing
Date, BPI will not, without the prior written consent of Winco, engage in
any of the following (the "Prohibited Activities"):
(a) Make any change in its Charter Documents;
(b) Issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind other
than in connection with the exercise of options or warrants to be
listed in Schedule 3.3 to the BPI Disclosure Letter;
(c) Declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares
of its stock;
(d) Except as listed in Schedule 6.3, enter into any contract or
commitment or incur or agree to incur any liability or make any
capital expenditures, except if it is in the normal course of business
(consistent with past practice) and involves an amount not in excess
of $50,000;
(e) Create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now
owned or hereafter acquired, except (1) with respect to purchase money
liens incurred in connection with the acquisition of equipment with an
aggregate cost not in excess of $100,000.00 necessary or desirable for
the conduct of the businesses of BPI, (2) (A) liens for taxes either
not yet due or being contested in good faith and by appropriate
proceedings (and for which contested taxes adequate reserves have been
established and are being maintained) or (B) materialmen's, mechanics'
or other like liens arising in the ordinary course of business (the
liens set forth in clause (2) being referred to herein as "Statutory
Liens"), or (3) liens to be set forth on Schedule 3.7 and/or 3.11 to
the BPI Disclosure Letter;
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(f) Sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(g) Negotiate for the acquisition of any business or the start-up of
any new business;
(h) Merge or consolidate or agree to merge or consolidate with
or into any other corporation;
(i) Waive any material rights or claims of BPI, provided that
BPI may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice;
(j) Commit a breach or amend or terminate any Material Documents
or right of BPI; or
(k) Enter into any other transaction outside the ordinary course
of its business or prohibited hereunder.
6.4 NO SHOP. Neither BPI, nor any agent, officer, director, trustee
or any representative of any of the foregoing will, during the period
commencing on the date of this Agreement and ending with the earlier to
occur of the Closing Date or the termination of this Agreement in
accordance with its terms, directly or indirectly: (i) solicit or initiate
the submission of proposals or offers from any person for; (ii) participate
in any discussions pertaining to; or (iii) furnish any information to any
person other than Winco or their authorized agents relating to, any
acquisition or purchase of all or a material amount of the assets of, or
any equity interest in, BPI or a merger, consolidation or business
combination of BPI.
6.5 NOTIFICATION OF CERTAIN MATTERS. BPI shall give prompt notice to
Winco and WMC of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would be likely to cause any
representation or warranty of BPI contained herein or to be set forth in
the BPI Disclosure Letter to be untrue or inaccurate in any material
respect at or prior to the Closing and (ii) any material failure of BPI to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by such person hereunder. The delivery of any notice
pursuant to this Section 6.5 shall not be deemed to (i) modify the
representations or warranties of the party delivering such notice, (ii)
modify the conditions set forth in Sections 7 and 8, or (iii) limit or
otherwise affect the remedies available hereunder to the party receiving
such notice.
6.6 FINAL FINANCIAL STATEMENTS. BPI shall provide to Winco prior to
the Closing Date, the unaudited balance sheets of BPI as of the end of all
months following the Balance Sheet Date, and the unaudited statement of
income and comprehensive income and cash flows for all months ended after
the Balance Sheet Date, disclosing no material adverse change in the
financial condition or the results of its operations from the financial
statements as of the Balance Sheet Date. Such financial statements shall
have been prepared in accordance with GAAP applied on a
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consistent basis throughout the periods indicated (except as noted
therein). Except as noted in such financial statements, all of such
financial statements will present fairly the results of operations for the
periods indicated therein.
7. COVENANTS OF WINCO, WMC AND WSC PRIOR TO CLOSING.
7.1 ACCESS AND COOPERATION; DUE DILIGENCE. Between the date of this
Agreement and the Closing Date, each of Winco, WMC and WSC will afford to
the authorized representatives of BPI access to all of its sites,
properties, books and records and will furnish BPI such additional
financial and operating data and other information as to their business and
properties as BPI may from time to time reasonably request. Winco, WMC and
WSC will cooperate with BPI, its representatives, auditors and counsel in
the preparation of any documents or other material which may be required in
connection with any documents or materials required by this Agreement or
necessary to complete the transactions contemplated hereunder.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Closing, Winco, WMC and WSC will, except as will be set
forth on Schedule 7.2 to the Winco Disclosure Letter and except in
connection with the Spin Off:
(a) Carry on its business in substantially the same manner as it
has heretofore and not introduce any material new method of
management, operation or accounting;
(b) Maintain its respective properties and facilities in as good
working order and condition as at present, ordinary wear and tear
excepted;
(c) Perform in all material respects all of its obligations
under agreements relating to or affecting its respective assets,
properties or rights;
(d) Use all reasonable efforts to keep in full force and effect
present insurance policies or other comparable insurance coverage;
(e) Use its reasonable efforts to maintain and preserve its
business organization intact, retain its present key employees and
maintain its relationships with suppliers, customers and others having
business relations with it;
(f) Maintain compliance with all material permits, laws, rules
and regulations, consent orders, and all other orders of applicable
courts, regulatory agencies and similar governmental authorities;
(g) Maintain present debt and lease instruments and not enter
into new or amended debt or lease instruments, without the knowledge
and consent of the BPI Shareholders (which consent shall not be
unreasonably withheld), provided that debt and/or lease instruments
may be replaced without the consent of the BPI Shareholders if such
replacement instruments are on terms at least as favorable to Winco as
the instruments being replaced; and
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(h) Maintain or reduce present salaries and commission levels
for all officers, directors, employees and agents except for ordinary
and customary bonus and salary increases for employees in accordance
with past practices.
7.3 PROHIBITED ACTIVITIES. Other than in connection with the Spin
Off, between the date hereof and the Closing Date, each of Winco, WMC and
WSC will not, without the prior written consent of BPI, engage in any of
the following (the "Prohibited Activities"):
(a) Make any change in its Charter Documents;
(b) Issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind other
than in connection with the exercise of options or warrants to be
listed in Schedule 4.3 to the Winco Disclosure Letter;
(c) Declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares
of its stock;
(d) Except as listed in Schedule 7.3, enter into any contract or
commitment or incur or agree to incur any liability or make any
capital expenditures, except if it is in the normal course of business
(consistent with past practice) and involves an amount not in excess
of $50,000;
(e) Create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now
owned or hereafter acquired, except (1) with respect to purchase money
liens incurred in connection with the acquisition of equipment with an
aggregate cost not in excess of $50,000 necessary or desirable for the
conduct of the businesses of Winco, (2) (A) liens for taxes either not
yet due or being contested in good faith and by appropriate
proceedings (and for which contested taxes adequate reserves have been
established and are being maintained) or (B) materialmen's, mechanics'
or other like liens arising in the ordinary course of business (the
liens set forth in clause (2) being referred to herein as "Statutory
Liens"), or (3) liens to be set forth on Schedule 4.7 and/or 4.11 to
the Winco Disclosure Letter;
(f) Sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(g) Negotiate for the acquisition of any business or the start-up of
any new business;
(h) Merge or consolidate or agree to merge or consolidate with
or into any other corporation;
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(i) Waive any material rights or claims of Winco, provided that
Winco may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice;
(j) Commit a breach or amend or terminate any Material Documents
or right of Winco; or
(k) Enter into any other transaction outside the ordinary course
of its business or prohibited hereunder.
7.4 NO SHOP. Neither Winco, WSC or WMC, nor any agent, officer,
director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with
the earlier to occur of the Closing Date or the termination of this
Agreement in accordance with its terms, directly or indirectly: (i)
solicit or initiate the submission of proposals or offers from any person
for; (ii) participate in any discussions pertaining to; or (iii) furnish
any information to any person other than BPI or its authorized agents
relating to, any acquisition or purchase of all or a material amount of the
assets of, or a majority equity interest in, Winco or a merger,
consolidation or business combination of Winco.
7.5 NOTIFICATION OF CERTAIN MATTERS. Winco, WMC and WSC shall give
prompt notice to BPI and the BPI Shareholders of (i) the occurrence or non-
occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of Winco contained herein or
in the Winco Disclosure Letter to be untrue or inaccurate in any material
respect at or prior to the Closing and (ii) any material failure of Winco
to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by such person hereunder. The delivery of any
notice pursuant to this Section 7.5 shall not be deemed to (i) modify the
representations or warranties of the party delivering such notice, (ii)
modify the conditions set forth in Sections 8 and 9, or (iii) limit or
otherwise affect the remedies available hereunder to the party receiving
such notice.
7.6 FINAL FINANCIAL STATEMENTS. Winco shall provide to BPI, prior to
the Closing Date, the unaudited consolidated balance sheets of Winco as of
the end of all months following the Balance Sheet Date, and the unaudited
consolidated statements of income and cash flows for all months ended after
the Balance Sheet Date, disclosing no material adverse change in the
financial condition or the results of its operations from the financial
statements as of the Balance Sheet Date. Such financial statements shall
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated (except as noted therein). Except as
noted in such financial statements, all of such financial statements will
present fairly the results of operations for the periods indicated therein.
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8. CONDITIONS PRECEDENT TO OBLIGATIONS OF WINCO, WSC AND WMC.
The obligations of Winco, WSC and WMC with respect to actions to be
taken on the Closing Date are subject to the satisfaction or waiver on or
prior to the Closing Date of all of the following conditions.
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of BPI contained in this Agreement shall be
true and correct in all material respects as of the Closing Date as though
such representations and warranties had been made as of that time; all the
terms, covenants and conditions of this Agreement to be complied with and
performed by BPI on or before the Closing Date shall have been duly
complied with and performed in all material respects; and certificates to
the foregoing effect dated the Closing Date, and signed by BPI and the BPI
Shareholders, as the case may be, shall have been delivered to Winco.
8.2 SATISFACTION. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and all
other related legal matters shall be reasonably satisfactory to Winco and
its counsel.
8.3 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the transactions contemplated hereunder and no
governmental agency or body shall have taken any other action or made any
request of BPI or the BPI Shareholders as a result of which Winco deems it
inadvisable to proceed with the transactions hereunder.
8.4 CONSENTS AND APPROVALS. The shareholders of Winco shall have
approved this Agreement. All necessary consents and approvals as listed in
Schedule 3.19 shall have been obtained. All necessary consent of and
filings with any governmental authority or agency relating to the
consummation of the transaction contemplated herein shall have been
obtained and made and no action or proceeding shall have been instituted or
threatened to restrain or prohibit the transactions hereunder and no
governmental agency or body shall have taken any other action or made any
request of BPI or the BPI Shareholders as a result of which Winco deems it
inadvisable to proceed with the transactions hereunder.
8.5 GOOD STANDING CERTIFICATES. BPI shall have delivered to Winco a
certificate, dated as of a date no later than ten days prior to the Closing
Date, duly issued by the Secretary of State of BPI's state of incorporation
that BPI is in good standing and that all state franchise and/or income tax
returns and taxes for each for all periods prior to the Closing have been
filed and paid.
8.6 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred with respect to BPI which would constitute a Material Adverse Effect.
8.7 OFFICER'S CERTIFICATE. Winco shall have received a certificate
or certificates, dated the Closing Date and signed by the President of BPI,
certifying the truth and correctness of attached copies of its Articles of
Incorporation (including amendments thereto) and Bylaws (including
amendments thereto).
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8.8 INCUMBENCY CERTIFICATE AND OTHER DOCUMENTS. Winco shall have
received an incumbency certificate or certificates, dated the Closing Date
and signed by the Secretary of BPI certifying the names, titles and
signatures of the officers authorized to execute the documents referred to
in this Section 8 and such additional supporting documentation and other
information with respect to the transactions contemplated hereunder as
Winco or their counsel may reasonably request.
8.9 OPINION OF COUNSEL. Winco shall have received an opinion from
counsel for BPI, dated the Closing Date, in form and substance reasonably
satisfactory to counsel for Winco.
8.10 RELEASE OF OBLIGATIONS AND STOCK OPTIONS. Winco shall have
obtained a release of each of the officers and directors of BPI related to
all matters involving BPI.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BPI AND THE SHAREHOLDERS.
The obligations of BPI and the BPI Shareholders with respect to
actions to be taken on the Closing Date are subject to the satisfaction or
waiver on or prior to the Closing Date of all of the following conditions.
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
the representations and warranties of Winco and WMC contained in this
Agreement shall be true and correct in all material respects as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of that time; all the terms, covenants
and conditions of this Agreement to be complied with and performed by Winco
and WMC on or before the Closing Date shall have been duly complied with
and performed in all material respects; and certificates to the foregoing
effect dated the Closing Date, and signed by Winco and WMC shall have been
delivered to BPI.
9.2 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other
related legal matters shall be reasonably satisfactory to the BPI
Shareholders and their counsel.
9.3 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the transactions hereunder and no governmental
agency or body shall have taken any other action or made any request of
Winco as a result of which BPI and the BPI Shareholders deem it inadvisable
to proceed with the transactions hereunder.
9.4 CONSENTS AND APPROVALS. The shareholders of Winco shall have
approved this Agreement. All necessary consents and approvals as listed in
Schedule 4.19 shall have been obtained. All necessary consent of and
filings with any governmental authority or agency relating to the
consummation of the transaction contemplated herein shall have been
obtained and made and no action or proceeding shall have been instituted or
threatened to restrain or
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prohibit the transactions hereunder and no governmental agency or body
shall have taken any other action or made any request of Winco as a result
of which the BPI Shareholders deem it inadvisable to proceed with the
transactions hereunder.
9.5 GOOD STANDING CERTIFICATES. Winco and WMC shall have delivered
to BPI and the BPI Shareholders certificates, dated as of the date no later
than 10 days prior to the Closing Date, duly issued by the Secretary of
State of Colorado that each of Winco and WMC is in good standing.
9.6 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred with respect to Winco or WMC which would constitute a Material
Adverse Effect.
9.7 OFFICER'S CERTIFICATE. BPI and the BPI Shareholders shall have
received a certificate or certificates, dated the Closing Date and signed
by the President of Winco, certifying the truth and correctness of attached
copies of Winco's Articles of Incorporation (including amendments thereto),
and Bylaws (including amendments thereto). BPI and the BPI Shareholders
shall have received a certificate or certificates, dated the Closing Date
and signed by the President of WMC, certifying the truth and correctness of
attached copies of WMC's Articles of Incorporation (including amendments
thereto), and Bylaws (including amendments thereto).
9.8 INCUMBENCY CERTIFICATE AND OTHER DOCUMENTS. BPI and the BPI
Shareholders shall have received an incumbency certificate or certificates,
dated the Closing Date, and signed by the Secretary of Winco, certifying
the names, titles and signatures of the officers authorized to execute the
documents referred to in this Section 9 and such additional supporting
documentation and other information with respect to the transactions
contemplated hereunder as BPI and the BPI Shareholders or their counsel may
reasonably request.
9.9 OPINION OF COUNSEL. BPI shall have received an opinion from
counsel for Winco, WSC and WMC, dated the Closing Date, in form and
substance reasonably satisfactory to counsel for BPI.
9.10 RELEASE OF OBLIGATIONS. BPI and the BPI Shareholders shall have
obtained a release of each of the officers and directors of Winco related
to all matters involving Winco except for obligations pursuant to stock
option agreements.
9.11 INDEMNITY AGREEMENT. BPI and the BPI Shareholders shall have
received an Indemnity Agreement in a form acceptable to them concerning
certain environmental, tax and other matters executed by WSC and its
affiliate, American Warrior, Inc.
10. ADDITIONAL AGREEMENTS.
10.1 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each party will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
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regulations to consummate the transactions contemplated by this Agreement
as soon as practicable after the date hereof. Winco, shall promptly
prepare and file with the Securities and Exchange Commission a proxy
statement (the "Proxy Statement") and Winco will take, in accordance with
applicable law and its Articles of Incorporation and Bylaws, all action
necessary to convene a meeting of its shareholders to consider and vote
upon the adoption of this Agreement. BPI shall cooperate with Winco in the
preparation of the Proxy Statement, including providing such information
about BPI and its plans with respect to Winco after the Merger as may be
reasonably requested by Winco.
10.2 COMPLETION OF THE DISCLOSURE LETTERS. BPI shall use its
reasonable best efforts to complete and deliver to Winco and WMC the BPI
Disclosure Letter by August 28, 2000. Winco, WSC and WMC shall use their
reasonable best efforts to complete and deliver to BPI and the BPI
Shareholders the Winco Disclosure letter by August 28, 2000.
10.3 PUBLIC ANNOUNCEMENTS. The initial press release of Winco with
respect to this Agreement shall be reviewed and approved by BPI.
Thereafter, Winco shall consult with BPI prior to issuing any press
releases or otherwise making public announcements with respect to this
Agreement and the transactions contemplated by this Agreement, except as
may be required by law.
10.4 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action, and to do, or cause to be done,
all things necessary, common, proper or advisable under applicable legal
requirements, to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, Winco, WSC, WMC, BPI and the BPI Shareholders, as the case may
be, shall take or cause to be taken all such necessary or convenient action
and execute, and deliver and file, or cause to be executed, delivered and
filed, all necessary or convenient documentation.
10.5 THE SPIN-OFF. Winco shall act promptly to effect the spin-off of
all of its existing assets and liabilities to a subsidiary to be formed,
Winco Spin-off Corporation ("WSC"), so that the spin-off is completed prior
to Closing. WSC shall be distributed to the pre-merger Winco shareholders
prior to Closing. As soon as WSC has been established, Winco shall cause
WSC to execute this Agreement. Prior to completion of the Spin Off, WSC
shall have completed and filed with the Securities and Exchange Commission
("SEC") a registration statement on Form 10 pursuant to Section 12 of the
of the Securities Exchange Act of 1934, as amended, and the SEC shall have
approved such Form 10.
10.6 WINCO MERGER CORPORATION. Upon execution of this Merger
Agreement, Winco shall act promptly to form a Colorado corporation, Winco
Merger Corporation ("WMC"), in accordance with Sections 1.4 and 4.3 hereof.
As soon as it has been established, Winco shall cause WMC to execute this
Merger Agreement.
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10.7 REVERSE SPLIT. Prior to the Closing, Winco shall obtain all
required approval of the Winco shareholders and complete such other actions
as are necessary to complete at or prior to Closing a reverse split of its
stock on approximately an 80:1 basis. (The exact ratio may be altered by
agreement of the parties prior to the filing of the Proxy Statement.)
10.8 TAXES. WSC shall be solely responsible for the payment of all
tax liability arising from the Spin Off. In order to evidence such
obligations of WSC, Winco shall, prior to the Spin Off, cause WSC to assume
such liability and indemnify Winco therefrom.
11. TERMINATION OF AGREEMENT.
11.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date solely:
(a) By mutual consent of all of the parties hereto;
(b) By BPI, on the one hand, or by Winco, WSC and WMC on the
other hand, if the transactions contemplated by this Agreement to take
place at the Closing shall not have been consummated by December 31,
2000, unless the failure of such transactions to be consummated is due
to the failure of the party seeking to terminate this Agreement to
perform any of its obligations under this Agreement to the extent
required to be performed by it prior to or on the Closing Date;
(c) By BPI, on the one hand, or by Winco, WSC and WMC, on the
other hand, if a material breach of the representations or a material
breach or default shall be made by the other party in the observance
or in the due and timely performance of any of the covenants or
agreements contained herein, and the curing of such default shall not
have been made on or before the Closing Date or by the BPI
Shareholders, if the conditions set forth in Section 9 hereof have not
been satisfied or waived as of the Closing Date, or by Winco, if the
conditions set forth in Section 8 hereof have not been satisfied or
waived as of the Closing Date;
(d) By BPI if the Winco Disclosure Letter shall not have been
completed and delivered to BPI on or before August 28, 2000, or if the
Winco Disclosure Letter contains information which causes BPI to
determine it would be inadvisable to proceed with the transactions
hereunder;
(e) By Winco and WMC if the BPI Disclosure Letter shall not have
been completed and delivered to Winco and WMC on or before August 28,
2000, or if the BPI Disclosure Letter contains information which
causes Winco and WMC to determine it would be inadvisable to proceed
with the transactions hereunder;
(f) By BPI on or before August 28, 2000, if it determines that
the merger would result in an adverse tax obligation and the parties
to this Agreement have not been able to agree to a restructuring of
the transaction.
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11.2 LIABILITIES IN EVENT OF TERMINATION. Termination of this
Agreement will in no way limit any obligation or liability of any party
based on or arising from a breach or default by such party with respect to
any of its representations, warranties, covenants or agreements contained
in this Agreement or in the Schedules delivered by such party, including,
but not limited to, legal and audit costs and out of pocket expenses.
12. INDEMNIFICATION.
12.1 INDEMNIFICATION BY BPI. BPI agrees to indemnify and hold
harmless Winco and its officers, directors, agents and representatives
against any and all losses, claims, damages, liabilities, costs and
expenses (including but not limited to, attorneys' fees and other expenses
of investigation and defense of any claims or actions), directly or
indirectly resulting from, relating to or arising out of: (i) any breach
of any covenant, agreement, warranty or representation contained in this
Agreement, (ii) any misstatement of a material fact contained in this
Agreement or in any of the documents executed in connection with the
transactions contemplated by this Agreement, or (iii) the omission to
state any fact necessary to make the statements contained in this Agreement
or in any of the documents executed in connection with the transactions
contemplated by this Agreement not misleading, but only if the omission
relates to information concerning BPI's operations. Provided, however,
that no claim for indemnification shall be made against BPI until Winco and
its officers, directors, agents and representatives have suffered adverse
consequences pursuant to this Section 12.1 in excess of $50,000.
12.2 INDEMNIFICATION BY WINCO AND WSC. Prior to the completion of the
Merger, Winco and WSC jointly and severally agree, and after the completion
of the Spin Off and Merger, WSC agrees to indemnify and hold harmless BPI
and the BPI Shareholders against any and all losses, claims, damages,
liabilities, costs and expenses (including but not limited to, attorneys'
fees and other expenses of investigation and defense of any claims or
actions) directly or indirectly resulting from, relating to or arising out
of: (i) any breach of any covenant, agreement, warranty or representation
of Winco contained in this Agreement, (ii) any misstatement of a material
fact contained in this Agreement or in any of the documents executed in
connection with the transactions contemplated by this Agreement, including
the Proxy Statement, but only if the misstatement relates to information
concerning Winco or its operations, or (iii) the omission to state any fact
necessary to make the statements contained in this Agreement or in any of
the documents executed in connection with the transactions contemplated by
this Agreement not misleading, but only if the omission relates to
information concerning Winco or its operations, provided, however, that no
claim for indemnification (other than for tax liabilities resulting from
the Spin Off) shall be made against Winco (prior to the Merger) or WSC
(prior to or after the Merger) until BPI or the BPI Shareholders have
suffered adverse consequences pursuant this Section 12.2 in excess of $50,000.
12.3 INDEMNIFICATION NOTICE. Should any party (the "Indemnified
Party") suffer any loss, damage or expense for which another party (the
"Indemnifying Party") is obligated to indemnify and hold such Indemnified
Party harmless pursuant to this Section 12 of this Agreement, the following
shall apply: If an Indemnified Party intends to exercise its right to
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indemnification provided in this Section 12, such Indemnified Party shall
notify each Indemnifying Party in writing of such Indemnified Party's
intention to do so and the facts or circumstances giving rise to the claim
(the "Indemnification Claim"). An Indemnification Claim, at the option of
the Indemnified Party, may be asserted as soon as any situation, event or
occurrence has been noticed by the Indemnified Party regardless of whether
actual harm has been suffered or out-of-pocket expenses incurred. During
the period of 15 days after notice by the Indemnified Party, each
Indemnifying Party shall be entitled to cure the defect or situation giving
rise to the Indemnification Claim to the satisfaction of the Indemnified
Party. If the Indemnifying Parties are unwilling or unable to cure the
defect giving rise to the Indemnification Claim during the 15-day period,
the Indemnified Party shall thereafter be entitled to indemnification as
provided in this Section 12.
12.4 MATTERS INVOLVING THIRD PARTIES. If any third party shall notify
any Indemnified Party with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any Indemnifying
Party under this Section 12, then the Indemnified Party shall promptly
notify each Indemnifying Party thereof in writing. Provided, however, that
no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying Party thereby is
prejudiced. Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from any
adverse consequences the Indemnified Party may suffer resulting from or
caused by the Third Party Claim, (ii) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, and (iii) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently. The Indemnifying
Party shall not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party, which consent shall not be withheld
unreasonably.
13. GENERAL PROVISIONS.
13.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations and warranties of the parties hereto contained in this
Agreement or in any writing delivered pursuant hereto or at the Closing
shall survive the execution and delivery of this Agreement and the Closing
and the consummation of the transactions contemplated hereby (and any
examination or investigation by or on behalf of any party hereto) until the
date eighteen months after the Closing Date (except for claims in respect
thereof pending at such time, which shall survive until finally resolved or
settled); provided, also, the representations, warranties, covenants and
agreements in Sections 3.18 and 10.5 shall survive until the expiration of
the statutory period of limitations for assessment of tax deficiencies,
including any extensions thereof, for each taxable year of BPI which begins
before the Closing Date and the representations, warranties, covenants and
agreements in Section 5 shall survive indefinitely. No action may be
commenced with
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respect to any representation, warranty, covenant or agreement in this
Agreement, or in any writing delivered pursuant hereto, unless written
notice, setting forth in reasonable detail the claimed breach thereof,
shall be delivered pursuant to Section 13.7 to the party or parties against
whom liability for the claimed breach is charged on or before the
termination of the survival period specified in Section 13.1 for such
representation, warranty, covenant or agreement.
13.2 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise),
without the prior written consent of the other parties, and any attempt to
make any such assignment without such consent shall be null and void.
Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
13.3 ENTIRE AGREEMENT. This Agreement and any attachments hereto, the
BPI Disclosure letter and the Schedules thereto (including the schedules,
exhibits and annexes attached hereto and thereto), the Winco Disclosure
Letter and the Schedules thereto (including the schedules, exhibits and
annexes attached hereto and thereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the parties
and supersede any prior agreement and understanding relating to the subject
matter of this Agreement. This Agreement, upon execution, constitutes a
valid and binding agreement of the parties hereto enforceable in accordance
with its terms and may be modified or amended only by a written instrument
executed by all parties.
13.4 COUNTERPARTS. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
13.5 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction, except as
provided in Schedule 13.5.
13.6 EXPENSES. Except as otherwise specifically provided herein, each
party to this Agreement shall bear its own direct and indirect expenses
incurred in connection with the negotiation and preparation of this
Agreement and the consummation and performance of the transactions
contemplated hereby, including, without limitation, all legal fees and fees
of any brokers, finders or similar agents; provided, however, that the fees
and expenses of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated in rendering an
opinion as to the fairness of the transactions contemplated hereby shall be
borne equally by Winco and the BPI Shareholders.
13.7 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (i) on the date of delivery if
delivered personally, or by telecopy or facsimile upon confirmation of
receipt, (ii) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (iii) on the 5th
business day following the date of mailing if delivered by registered or
certified mail, return receipt requested,
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postage prepaid. All notices hereunder shall be delivered as set forth
below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
(a) If to Winco or WMC:
Winco Petroleum Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile:
Attention: ▇▇▇▇▇ ▇'▇▇▇▇▇
with a copy to:
Berenbaum, Weinshienk & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
(b) If to BPI or the BPI Shareholders:
Rothgerber ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
with a copy to:
CeBourn, Ltd.
One Norwest Center
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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13.8 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Colorado.
13.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly
agreed that the parties shall be entitled to specific performance of the
terms hereof, this being in addition to any other remedy to which they are
entitled at law or in equity.
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13.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any
other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any
such breach or default, or of any similar breach or default occurring
later; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default occurring before or after that waiver.
13.11 TIME. Time is of the essence with respect to this Agreement.
13.12 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and
if such modification is not possible, such provision shall be severed from
this Agreement, and in either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
13.13 REMEDIES CUMULATIVE. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive, but each shall be
cumulative with all other rights, remedies and elections available at law
or in equity.
13.14 CAPTIONS; CONSTRUCTION. The headings of this Agreement are
inserted for convenience only, and shall not constitute a part of this
Agreement or be used to construe or interpret any provision hereof. This
Agreement has been fully reviewed and negotiated by the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall
be construed strictly against any party under any rule of construction or
otherwise.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WINCO PETROLEUM CORPORATION BUSINESS PRODUCTS, INC.
By: /s/ By:/s/
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Name: Name:
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Title: Title:
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Date: Date:
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WINCO MERGER CORPORATION WINCO SPIN-OFF CORPORATION
By: /s/ By:/s/
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Name: Name:
---------------------------- ------------------------------
Title: Title:
--------------------------- -----------------------------
Date: Date:
---------------------------- ------------------------------
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