SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT #1 TO
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________________ to __________________
Commission file number: 33-14707-NY
CBQ, INC.
---------
(Exact name of small business issuer as specified in its charter)
Colorado 84-1047159
- -------------------------------- ---------------------
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
6300 Ridgelea Place, Ste. 600 76116
- --------------------------------------- ------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (817) 737-6100
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of May 24, 1999, there were
approximately 26,406,532 shares outstanding.
<PAGE>
I. PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CBQ, Inc. and Subsidiary
(formerly FREEDOM FUNDING, INC.)
(a development stage company)
BALANCE SHEETS
March 31, December 31,
1999 1998
---- ----
(Unaudited)
Assets:
Current Assets:
Cash $ 22,418 $ 97,907
Accounts Receivable 9,898 --
Other Current Assets 7,258 4,998
--------- ---------
Total Current Assets $ 39,574 $ 102,905
Equipment, at cost (net at March 31)
Computers and related equipment 212,206 68,905
Furniture and fixtures 8,214 5,954
Software 5,289 --
--------- ---------
225,709 74,859
Less accumulated depreciation 65,960 38,960
--------- ---------
159,749 35,899
Other assets (net):
bid4it technology, 28,125 37,500
Organization costs 3,965 667
Goodwill 297,053 48,000
Deposits -- 7,259
--------- ---------
Total Assets $ 528,466 $ 232,230
========= =========
Liabilities and Stockholders' Equity :
Current Liabilities:
Accounts payable 104,273 $ 105,918
Accrued royalties 50,000 79,382
Accrued expenses, other 13,870 31,203
Deferred revenues 52,121 --
Deposit 2,500 2,500
Officer Advances -- 2,575
Sales Tax Payable 2,581 --
--------- ---------
Total Current Liabilities $ 225,345 $ 221,578
========= =========
Long-term liabilities:
Notes Payable to Bank 14,026 --
Royalties 79,382 --
Notes to shareholders 73,887 --
--------- ---------
Total Long-term liabilities 167,295 --
========= =========
Stockholders' Equity:
Preferred stock, 70,000 shares issued 70 70
Common stock, issued 20,275,332 3,640 2,640
issud at December 31, 21,275,332
issued at March 31
Additional paid-in capital 470,425 209,682
Accumulated deficit (338,309) (201,740)
--------- ---------
Total stockholders' equity (deficit) (135,826) 10,652
--------- ---------
Total liabilities and stockholders'
equity (deficit) $ 528,466 $ 232,230
========= =========
See accompanying Notes to Financial Statements
<PAGE>
CBQ, Inc. and Subsidiary
(formerly FREEDOM FUNDING, INC.)
(a development stage company)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
-------------------------------
1999 1998
---- ----
Revenues $ 18,852 $ --
Costs and expenses
Costs of revenues 7,232 --
Sales and marketing 19,070 --
General and administrative 106,063 --
Depreciation and amortization 21,209 --
Interest expense 1,847 --
------------ ------------
155,421 --
Net income (loss) (136,569) --
Net income (loss) per common share * *
Weighted average number of
common shares outstanding 20,278,432 2,075,325
* Less than $.01 per share
See accompanying Notes to Financial Statements
<PAGE>
CBQ, Inc. and Subsidiary
(formerly FREEDOM FUNDING, INC.)
(a development stage company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
----------------------------
1999 1998
---- ----
OPERATING ACTIVITIES:
Net (loss) (136,569) --
Adjustments necessary to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 21,209 --
Increase in accounts receivable (2,075) --
Increase in other current assets (2,260) --
Decrease in deposits receivable 7,259 --
Decrease in accounts payable (23,043) --
Increase in royalties payable 50,000 --
Decrease in other accrued expenses (24,322) --
Increase in deferred revenues 7,434 --
Decrease in officer advances (2,575) --
Decrease in sales tax payable (941) --
--------- --
Net cash used in operating activities (105,883) --
INVESTING ACTIVITIES:
Net assets acquired in acquisition of
Reliance Technologies, Inc. (261,178) --
--------- --
Net cash used in operating activities (261,178)
FINANCING ACTIVITIES:
Restricted common stock issued in
acquisition of Reliance Technologies 261,743 --
Loans from shareholders 30,355 --
Repayment of notes payable (526) --
--------- --
Net cash used in operating activities 291,572 --
--------- --
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS (75,489) --
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD 97,907 --
--------- --
END OF PERIOD $ 22,418 --
========= ==
See accompanying Notes to Financial Statements
<PAGE>
CBQ, Inc. and Subsidiary
(formerly FREEDOM FUNDING, INC.)
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
Basis of Presentation: In the opinion of management of CBQ, Inc. (CBQI or the
Company), the accompanying consolidated financial statements, which have not
been audited by independent certified public accounts, contain all adjustments
necessary to present fairly the Company's consolidated financial position,
results of its operations, and its cash flows for the periods reported. The
consolidated finanial statements contain the accounts of the Company and its
subsidiaries. The statement of operations reflects the results of Reliance
Technologies, Inc., and its subsidiaries for the period from March 15, 1999
(date of acquisition) to March 31, 1999. All significant intercompany balances
and transactions have been eliminated. The results of operations for the three
months ended March 31, 1999 and 1998 are not necessarily indicative of the
results to be expected for a full year.
Note 1. Organization and Nature of Business: CBQ, Inc., (formerly Freedom
Funding, Inc.) a Colorado corporation, was incorporated September 18, 1986,
under the laws of the State of Delaware, and changed its situs to Colorado in
1989. Since inception, the Company has been in the development stage. The
Company's primary intended activity is to engage in all aspects of review and
evaluation of private companies, partnerships or sole proprietorships for the
purpose of completing mergers or acquisitions with the Company, and to engage in
mergers and acquisitions with any or all varieties of private entities. On
November 18, 1999, the Company acquired a wholly-owned subsidiary, CyberQuest,
Inc., which had recently purchased the assets and business of CyberQuest, Ltd.
The Company on March 15, 1999, acquired all of the outstanding shares of
Reliance Technologies, Inc., a privately-held Texas corporation (Reliance), in a
tax free exchange. Reliance was acquired solely for the issuance of 1,000,000
restricted common shares of the Company. A a result of these acquisitions, the
Company is now a full service internet development company, specializing in
developing, implementing and maintaining creative business WebSites, Commercial
Sites and Database Development.
CyberQuest has also developed a straight forward method that frees small
business from having to integrate and develop significant amounts of software
and manage the internet site. The Company's internet sites, goodstuffcheap,
bid4it and shop4it.com allow clients to place their products and services on the
Internet quickly and inexpensively and to begin transacting commerce over the
Net.
Note 2. A summary of significant accounting policies is currently on file with
the U.S. Securities and Exchange Commission in registrant's previous filings
under the Exchange Act.
Note 3. The loss per share was computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the period.
Note 4. Registrant has not declared or paid dividends on its common shares since
inception.
Note 5. The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements.
Note 6. Income taxes have not been provided for in that registrant has not had a
tax liability from inception through the date of this filing, due to operating
losses.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This report contains certain forward-looking statements with respect to the
Company's operations, financial condition and liquidity. These statements
reflect management's best assessment of a number of risks and uncertainties. The
Company's results could differ materially from the results anticipated in these
forward looking statements as a result of a number of factors described in this
report and other risks described in the Company's other filings with the
Securities and Exchange Commission.
Results of Operations: The Company had no operations until the fourth quarter of
1998, when it acquired CyberQuest, as previously reported. Accordingly, there
were no operations in the first quarter of 1998 to compare with the operations
of the corresponding quarter of the current year. On March 15, 1999, the Company
acquired all of the outstanding shares of Reliance Technologies, Inc., a
privately-held Texas corporation ("Reliance"), in a tax free exchange. Reliance
was acquired solely for the issuance of 1,000,000 "restricted" common shares of
the Company. Revenues for the first three months of 1999 amounted to $18,852,
which was entirely attributed to the operations of Reliance from March 15, 1999,
through March 31, 1999. This income was realized from consulting fees and
charges for providing internet services. Costs of revenues of $7,232 were
primarily incurred by Reliance and its subsidiary in connection with its
operations as an internet service provider. Sales and marketing expenses of
$19,070 were incurred by the Company and its subsidiaries in promoting their
various activities in the area of internet auctions and internet services.
General and administrative expenses amounted to $106,063, which included salary
expenses, the expenses of running the Company's office in Dallas, and legal and
professional fees.
On 14, 1999, the Company acquired all of the outstanding shares of Priority One
Electronic Commerce Corporation, a privately-held Pennsylvanian corporation
("POECC"), in a tax free exchange. POECC was acquired solely for the issuance of
900,000 "restricted" common shares of the Company. Concurrently with the
closing, the Company engaged the president of POECC, Mr. Sidney Lieberman, as a
consultant. Mr. Lieberman, in accordance with the terms of his consulting
agreement was granted an option to acquire 100,000 common shares of the Company
at the market price therefor on the date of closing, which was then$3.00 per
share. The common shares which the Company optioned to Mr. Lieberman upon
exercise of his option will be registered under the Securities Act of 1933. Mr.
Lieberman also serves on the board of directors for the Company.
On May 11, 1999, the Company acquired 19% of the outstanding interest of Global
Logistics Partners, LLC, a privately-held Texas limited liability company
("GLP"), in a tax free exchange. This interest was acquired solely for the
issuance of 4,233,200 "restricted" common shares of the Company. Concurrenty
with the closing, Mr. Richard Williamson assumed the positions of Chairman of
the Board of Directors, CEO and President of the Company, and GLP assumed
operational control of the Company.
Liquidity: The Company has not generated material cash flows from operating or
investing activities since inception. Operating capital was primarily provided
from inception through 1987 from the proceeds of an initial funding prior to a
public offering and then from the public offering itself. The Company then was
extended credit through a former officer and director, all of which was
subsequently converted to common stock. The Company, during the period at issue,
received proceeds from loans from certain shareholders. After the period covered
by this report, the Company acquired its interest in GLP and GLP agreed to
provide managerial support to the Company and to use its best efforts to
perpetuate the business of the Company.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Litigation: No material legal proceedings to which the Company (or any
officer or director of the Company, or any affiliate or owner of record or
beneficially of more than five percent of the Common Stock, to management's
knowledge) is a party or to which the property of the Company is subject is
pending and no such material proceeding is known by management of the Company to
be contemplated.
Item 2. Change in Securities: This item is not applicable to the Company for the
period covered by this report.
Item 3. Defaults Upon Senior Securities: This item is not applicable to the
Company for the period covered by this report.
Item 4. Submission of Matters to a Vote of Security Holders: There were no
meetings of security holders during the period covered by this report; thus,
this item is not applicable.
Item 5. Other Information: There is no additional information which the Company
is electing to report under this item at this time.
Item 6. Exhibits and Reports on Form S-K: No reports on Form 8-K were filed by
the Company during the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 24th day of May, 1999.
CBQ, INC.
(Registrant)
By: /s/ Richard Williamson
- --------------------------
Richard Williamson, President and
Chief Executive Officer
By: /s/ Robert W. Hampton
- --------------------------
Robert W. Hampton,Chief Financial
and Accounting Officer and Treasurer
<PAGE>
Exhibits:
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10.1 Reliance Acquisition Contract
10.2 Priority One Acquisition Contract
10.3 Global Logistics Partners Acquisition Contract
PLAN AND AGREEMENT OF PURCHASE
This plan and agreement of purchase (Plan) has been adopted as a reorganization
under Section 368(b) of the Internal Revenue Code and entered into in Dallas,
Texas, this fifth day of March, 1999, between CBQ, Inc., a Colorado corporation
referred to in this Agreement as either the Purchaser or "CBQ", and Reliance
Technologies, Inc., a Texas corporation, and the shareholders of Reliance
Technologies, Inc., all of whom are sometimes collectively referred to in this
Agreement as the "Shareholders".
CBQ will acquire (at the Closing) from the Shareholders 100% of the issued and
outstanding capital stock of Reliance Technologies, Inc. in exchange for shares
of voting stock of CBQ. Under this Plan, Reliance Technologies, Inc. will become
a subsidiary of CBQ.
ARTICLE I
EXCHANGE OF VOTING CAPITAL STOCK
1.01. Transfer and Delivery of Reliance Technologies, Inc. Shares. At the
closing Shareholders will transfer and deliver to CBQ certificates evidencing
100% of the issued and outstanding Capital stock of Reliance Technologies, Inc.
duly endorsed in blank so as to effect transfer by delivery.
1.02. Issuance and Delivery of CBQ Shares. In exchange for the transfer by
Shareholders to CBQ of 100% of the issued and outstanding Reliance Technologies,
Inc. capital shares hereunder, CBQ will forthwith cause to be issued and
delivered to the Shareholders 1,000,000 restricted common shares of CBQ
(Collectively, the CBQ Shares).
1.03. CBQ will establish at closing "The Reliance Technology Stock Option Plan",
Exhibit 4 to this Agreement, and will contribute 100,000 shares to this
Incentive Stock Option Plan for key employees of Reliance Technologies, Inc.
1.04. CBQ will fund or will have funded the Business Plan of Reliance
Technology, Inc., in the cumulative amount of $250,000, within twelve (12)
months of the Closing Date. Funded will mean that CBQ has arranged equity
financing from any source. It may involve equipment or services provided by
outside suppliers.
1.05. Right of Recission. Should CBQ not fund or arrange funding as described in
1.04 above, then Reliance Technologies, Inc. reserves the right to rescind this
Agreement in its entirety. If rescinded, all CBQ Shares issued in 1.02 above
shall be transferred and delivered to CBQ; the certificates duly endorsed in
blank so as to effect transfer by delivery. Any rights, including shares issued
from those rights, granted under the Reliance Technology Stock Option Plan in
1.03 above shall be immediately void and of no effect. In addition, all monies
funded under 1.04 above are due and payable to CBQ. This Right of Recission will
expire Midnight twelve (12) months from the Date of Closing.
1.04.Closing Date. The Closing Date will be March 15, 1999 at 10:00 AM at the
offices of CBQ in Dallas, Texas unless otherwise determined by Mutual
agreement.
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND ACQUIRED CORPORATION
2.01. Organization and Standing. Reliance Technologies, Inc. is a corporation
duly organized, validly existing and in good standing under the laws of Texas,
with all Corporate powers necessary to own property and carry on its business as
it is now being conducted. Copies of the articles of incorporation and bylaws of
Reliance Technologies, Inc. delivered to Purchaser herewith are complete and
accurate as of the Closing Date.
2.02. Balance Sheet. A balance sheet and related statements of operations, cash
flows and equity of Reliance Technologies, Inc. dated as of and for the three
year or lesser period, if inception occurred within three years, ended December
31, 1998, shall forthwith be delivered to CBQ. Reliance Technologies, Inc. shall
cause these financial statements to be (a) audited in accordance with Generally
Accepted Auditing Standards, (b) prepared in accordance with Generally Accepted
Accounting Principles applied on a consistent basis fairly presenting the
financial position of Reliance Technologies, Inc. and (c) prepared to as to
comply with Regulation S X and the time periods set forth in Form 8-KSB, that
being within 75 days after the Closing Date. Reliance Technologies, Inc. shall
also deliver to CBQ within the aforesaid 75 day period any other audited and/or
unaudited financial statements required under Regulation S-X, Form 8-KSB or
otherwise by applicable securities laws. (The foregoing audited and unaudited
financial statements are collectively referred to herein as the "Balance
Sheet".)
2.03. Capitalization. Reliance Technologies, Inc. has an outstanding
capitalization, which is all in the hands of the Shareholders, all of which has
been fully paid for and is non assessable. There are no outstanding
subscriptions, options, contracts, commitments or demands relating to the
capital stock of Reliance Technologies, Inc. or any other agreements of any
character under which Reliance Technologies, Inc. or the Shareholders would be
obligated to issue or purchase shares of Reliance Technologies, Inc. capital
stock, except as described and disclosed on Exhibit 1 to this Agreement.
2.04. Title to Assets. Reliance Technologies, Inc. has good and marketable title
to all of its assets, all as set forth in the Balance Sheet, none of which are
subject to any mortgage, pledge, lien, charge, security interest, encumbrance or
restriction whatsoever except those that: (a) are disclosed on the Balance Sheet
and/or the footnotes thereto or (b) do not materially and adversely affect the
value of the asset. Further, the assets of Reliance Technologies, Inc. are in
good condition and repair.
2.05. Schedule of Assets. Reliance Technologies, Inc. shall forthwith deliver to
Purchaser a schedule of assets containing, as of the Closing Date, a true and
complete: (a) description of all software licensing and sublicensing agreements
in favor of or made by Reliance Technologies, Inc.; (b) description of any real
property in which Reliance Technologies, Inc. has a leasehold interest; (c) list
of all capitalized equipment of Reliance Technologies, Inc. that sets forth any
liens, claims, encumbrances, charges, restrictions, covenants and conditions
concerning the listed items; (d) list of all machinery, tools, and equipment in
which Reliance Technologies, Inc. has a leasehold interest, with a description
of each interest; (e) list of all patents, patent licenses, trademarks,
trademark registrations, trade names, copyrights and copyright registrations
owned by Reliance Technologies, Inc.; and (f) list of all interests in
subsidiaries and/or joint ventures.
2
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2.06. Liabilities. Except as set forth in the Balance Sheet, Reliance
Technologies, Inc. presently has no outstanding indebtedness other than
liabilities incurred in the ordinary course of business. Reliance Technologies,
Inc. is not in default with respect to any terms or conditions of any
indebtedness. Further, Reliance Technologies, Inc. has not made any assignment
for the benefit of creditors, nor has any involuntary or voluntary petition in
bankruptcy been filed by or against Reliance Technologies, Inc..
2.07. Litigation. Reliance Technologies, Inc. is not a party to, nor has it been
threatened with, any litigation or governmental proceeding that, if decided
adversely to it, would have a material and adverse effect on its operations or
business, or on the financial condition, net worth, prospects or business of
Reliance Technologies, Inc. To the best of the Reliance Technologies, Inc.'s
knowledge, it is not aware of any facts that might result in any action, suit or
other proceeding that would result in any material and adverse change in the
business or financial condition of Reliance Technologies, Inc.
2.08. Compliance with Law and Instruments. The business and operations of
Reliance Technologies, Inc. are not infringing on or otherwise acting adversely
to any copyrights, trademark rights, patent rights or licenses owned by any
other person, and there is not any pending claim or threatened action with
respect to such rights. Reliance Technologies, Inc. is not obligated to make any
payments in the form of royalties, fees or otherwise to any owner of any patent,
trademark, trade name or copyright, except as set forth on Exhibit 2.
2.09. Contractual Obligations. Reliance Technologies, Inc. is not a party to or
bound by any written or oral: (a) contract not made in the ordinary course of
business, (b) bonus, pension, profit sharing, retirement, stock option,
hospitalization, group insurance or similar plan providing employee benefits
other than in the ordinary course of business, except as disclosed on Exhibit 3
to this Agreement, (c) any real or personal property lease other than in the
ordinary course of business or (d) deed of trust, mortgage, conditional sales
contract, security agreement, pledge agreement, trust receipt or any other
agreement subjecting any of the assets or properties of Reliance Technologies,
Inc. to a lien or encumbrance. Reliance Technologies, Inc. has performed all
obligations required to be performed by it under any of the contracts and leases
to which it is a party as of the Closing Date and is not in material breach
under any of the contracts, leases or other arrangements by which it is bound.
None of the parties with whom Reliance Technologies, Inc. has contractual
arrangements are in default of their obligations.
2.10. Changes in Compensation. Since the date of the Balance sheet, Reliance
Technologies, Inc. has not granted any general pay increase to employees or
changed the rate of compensation, commission or bonus payable to any officer,
employee, director, agent or stockholder, other than in the normal course of
business.
2.11. Records. All of the account books, minute books, stock certificate books
and stock transfer ledgers of Reliance Technologies, Inc. are current and
accurate.
2.12. Authority. The execution and performance of this Agreement have been duly
authorized by all requisite corporate action. This Agreement constitutes a valid
and binding obligation of Reliance Technologies, Inc. and the Shareholders in
accordance with its terms. No provision of the articles of incorporation,
bylaws, minutes, share certificates or contracts prevents Reliance Technologies,
Inc. and/or the Shareholders from delivering the Reliance Technologies, Inc.
shares to CBQ in the manner contemplated under the Plan.
3
<PAGE>
2.13. Taxes. Reliance Technologies, Inc. has filed all income tax returns and,
in each jurisdiction where qualified or incorporated, all income tax and
franchise tax returns that are required to be filed. Reliance Technologies, Inc.
has paid all taxes as shown on the returns as have become due, and has paid all
assessments received that have become due.
2.14. Brokers. All negotiations on the part of Reliance Technologies, Inc. and
the Shareholders related to the Plan have been accomplished solely by Reliance
Technologies, Inc. and the Shareholders without the assistance of any person
employed as a broker or finder. Reliance Technologies, Inc. and the Shareholders
have done nothing to give rise to any valid claims for a broker's commission,
finder's fee or any similar charge.
2.15. Full Disclosure. As of the Closing Date, Reliance Technologies, Inc. and
the Shareholders have disclosed all events, conditions and facts materially
affecting the business and prospects of Reliance Technologies, Inc. The
Shareholders and Reliance Technologies, Inc. have not withheld knowledge of any
event, condition or fact that they have reasonable grounds to know may
materially affect the business and prospects of Reliance Technologies, Inc. None
of the representations and warranties made by the Shareholders or Reliance
Technologies, Inc. in this Agreement or in any instrument, writing or other
document furnished to CBQ contains any untrue statement of a material fact, or
fails to state a material fact.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01. Organization and Standing. CBQ is a corporation duly organized, validly
existing and in good standing under the laws of Colorado, with all corporate
powers necessary to own property and carry on its business as it is now being
conducted. Copies of the articles of incorporation and bylaws of CBQ delivered
to the Shareholders and Reliance Technologies, Inc. herewith are complete and
accurate as of the Closing Date.
3.02. Subsidiaries. CBQ has subsidiaries.
3.03. Capitalization. CBQ has an authorized capitalization consisting of
500,000,000 common shares, $.0001 par value per share, and 100,000,000 preferred
shares, $.001 par value per share. As of the Closing Date, the number of common
shares and preferred shares outstanding is as set forth in the Form 8K-A as of
February 2, 1999; all of which issued and outstanding shares are fully paid for
and non assessable. CBQ has granted and registered 280,000 S-8 options; and
granted, subject to vesting, 300,000 options to outside parties at an option
price of closing market bid price or greater.
3.04. Due Delivery. The CBQ Shares issued to the Shareholders have been validly
authorized and issued and are fully paid for and non assessable. No CBQ
shareholder has any preemptive right of subscription or purchase with respect to
these shares.
3.05. Authority. The execution and performance of this Agreement have been duly
authorized by all requisite corporate action. This Agreement constitutes a valid
and binding obligation of CBQ in accordance with its terms. No provision of the
articles of incorporation, bylaws, minutes, share certificates or contracts
prevents CBQ from delivering the CBQ shares in the manner contemplated under the
Plan.
4
<PAGE>
3.06. Brokers. All negotiations on the part of CBQ related to the Plan have been
accomplished solely by CBQ without the assistance of any person employed as a
broker or finder. CBQ has done nothing to give rise to any valid claims for a
broker's commission, finder's fee or any similar charge.
3.07. Full Disclosure. As of the Closing Date, CBQ has disclosed all events,
conditions and facts materially affecting the business and prospects of CBQ, and
CBQ has not withheld knowledge of any event condition or fact that it has
reasonable grounds to know may materially affect the business and prospects of
CBQ. None of the representations and warranties made by CBQ in this Agreement or
in any instrument, writing or other document furnished to the Shareholders or
Reliance Technologies, Inc. contains any untrue statement of a material fact, or
fails to state a material fact.
ARTICLE IV
SURVIVAL OF WARRANTIES AND WARRANTIES
4.01. Nature and Survival of Representations and Warranties. All statements of
fact contained in this Agreement or in any memorandum, certificate, letter,
document or other instrument delivered by or on behalf of any of the parties
hereto to any other party pursuant to this Agreement shall be deemed
representations and warranties made by the delivering party to the other parties
under this Agreement. The covenants, representations and warranties of the
parties shall survive the Closing Date for a period of one year, and then they
shall lapse and be of no further effect.
4.02. Expenses. The parties to this Agreement shall pay their own expenses
incurred hereunder and in regards of the transactions contemplated hereby,
including, but not limited to, all fees and expenses of their respective counsel
and accountants.
ARTICLE V
COMPLIANCE WITH SECURITIES LAWS
5.01. Acknowledgments of the Shareholders. The Shareholders acknowledge,
understand and agree that: (a) The certificates representing the CBQ Shares will
each bear a legend restricting transfer in accordance with the exemptions from
registration under the Securities Act of 1933, as amended, which CBQ has relied
upon in the issuance of the CBQ Shares. (b) The CBQ Shares have not been
registered under the Securities Act of 1933, as amended, or any applicable state
law (collectively, the Securities Act). (c) The CBQ Shares may not be sold,
offered for sale, transferred, pledged, hypothecated or otherwise disposed of
except in compliance with the Securities Act of 1933 or 1934. (d) The legal
consequences of the foregoing mean that the Shareholders must bear the economic
risk of the investment in the CBQ Shares for the requisite period of time. (e)
No federal or state agency has made any finding or determination as to the
fairness of an investment in CBQ, or any recommendation or endorsement of this
investment.
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<PAGE>
5.02. Further Representations and Warranties of Shareholders. Shareholders each
individually represent and warrant to CBQ as follows: (a) I have the financial
ability to bear the economic risks of my investment, have adequate means of
providing for my current needs and personal contingencies, and have no need for
liquidity in this investment; and, further, I have evaluated the high risks of
investing in CBQ and have such knowledge and experience in financial and
business matters in general and in particular with respect to this type of
investment that I am capable of evaluating the merits and risks of an investment
in the CBQ Shares. (b) I have been given the opportunity to ask questions of and
receive answers from CBQ concerning the terms and conditions of this investment,
and to obtain additional information necessary to verify the accuracy of the
information I desired in order to evaluate my investment, and in evaluating the
suitability of this investment I have not relied upon any representation or
other information (whether oral or written), other than that furnished to me by
CBQ or its representatives; further, I have had the opportunity to discuss with
my professional, legal, tax and financial advisers the suitability of an
investment in the CBQ Shares for my particular tax and financial situation; and,
further, in making the decision to purchase the CBQ Shares, I have relied solely
upon independent investigations made by me or on my behalf. (c) I am acquiring
the CBQ Shares solely for my own personal account, for investment purposes only,
and am not purchasing with a view to, or for, the resale, distribution,
subdivision or fractionalization thereof.
ARTICLE VI
MISCELLANEOUS
6.01. Amendments. This Agreement may be amended or modified at any time, but
only by an instrument in writing executed by Reliance Technologies, Inc., CBQ
and each of the individual Shareholders.
6.02. Waiver. The Shareholders of Reliance Technologies, Inc. and/or CBQ may, in
writing, (a) extend the time for performance of any of the obligations of any
other party to this Agreement, (b) waive any inaccuracies or misrepresentations
contained in this Agreement or in any document delivered pursuant to this
Agreement by any other party and/or (c) waive compliance with any of the
covenants, or performance of any obligations, contained in this Agreement by any
other party.
6.03. Assignment. (a) Neither this Agreement nor any right created hereby shall
be assignable by any party without the prior written consent of the other
parties, except by the laws of succession. (b) This Agreement shall be binding
on and inure to the benefit of the respective successors and assigns of the
parties. Nothing in this Agreement, expressed or implied, is intended to confer
upon any person, other than the parties and their permitted successors and
assigns, any rights or remedies under this Agreement.
6.04. Notices. Any notice or other communication required or permitted by this
Agreement must be in writing and shall be deemed to be properly given when
delivered in person to an officer of the other party, or to the party
individually when deposited in the U.S. Mails for transmittal by certified or
registered mail, postage prepaid, or when deposited with a public telegraph
company for transmittal, charges prepaid, or when delivered via facsimile;
provided, however, that the communication is addressed as follows:
6
<PAGE>
(a) in case of Reliance Technologies, Inc. and the Shareholders:
4851 Keller Spring Road
Suite 228
Addison, TX 75001; (972) 381-1353; and
(b) in case of CBQ:
4851 Keller Springs Rd.
Suite. 213
Addison, Texas 75001; (972) 732-1100
6.05. Headings. Paragraph and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
6.06. Entire Agreement. This Agreement contains the entire agreement between the
parties relating to the subject matter hereof. It may be executed in any number
of counterparts, but the aggregate of such counterparts constitute only one and
the same instrument.
6.07. Partial Invalidity. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if it never contained any such invalid, illegal or unenforceable
provisions.
6.08. Controlling Law. The validity, interpretation and performance of this
Agreement shall be controlled by and construed under the laws of the State of
Texas, and venue for any lawsuit shall be in Dallas County, Texas.
6.09. Attorney's Fees. If any action at law or in equity, including any action
for declaratory relief, is brought to enforce or interpret the provisions of
this Agreement, the prevailing party shall be entitled to recover reasonable
attorney's fees from the other party. The attorney's fees may be ordered by the
court in the trial of any action described in this paragraph or may be enforced
in a separate action brought for determining attorney's fees.
6.10. Specific Performance. The parties declare that it is impossible to measure
in money the damages that will accrue to a party or its successors as a result
of any other parties' failure to perform any of the obligations under this
Agreement; therefore, if a party or its successor institutes any action or
proceeding to enforce the provisions of this Agreement, any party opposing such
action or proceeding agrees that specific performance may be sought and obtained
for any breach of this Agreement.
6.11. Arbitration. Any dispute relating to the interpretation or performance of
this Agreement shall be resolved at the request of either party through binding
arbitration. Arbitration shall be conducted in Dallas, Texas in accordance with
the then-existing rules of the American Arbitration Association. Judgment upon
any award by the arbitrators may be entered by any state or federal court having
jurisdiction. It is the intent of the parties to this Agreement that to
arbitrate be irrevocable.
7
<PAGE>
Purchaser: CBQ, Inc.:
By:
-----------------------
Michael L. Sheriff, CEO
Acquired Corporation: Reliance Technologies, Inc.
By:
-----------------------
Name:
---------------------
Title:
--------------------
Shareholders or Shareholder Agent:
By: By:
----------------------- -----------------------
Shareholder Shareholder
By: By:
----------------------- -----------------------
Shareholder Shareholder
By: By:
----------------------- -----------------------
Shareholder Shareholder
*
By: By:
----------------------- -----------------------
Shareholder Shareholder
By: By:
----------------------- -----------------------
Shareholder Shareholder
By: By:
----------------------- -----------------------
Shareholder Shareholder
By: By:
----------------------- -----------------------
Shareholder Shareholder
By: By:
----------------------- -----------------------
Shareholder Shareholder
8
<PAGE>
Exhibit 1
Subscriptions, Options, Contracts, Commitments or Demands
relating to the Capital Stock of Reliance Technologies, Inc.
Acquired Corporation: Reliance Technologies, Inc.
By:
---------------------
Name:
-------------------
Title:
------------------
<PAGE>
Exhibit 2
Payments in the form of Royalties, Fees or otherwise to any owner
of any Patent, Trademark, Trade Name or Copyright
Acquired Corporation: Reliance Technologies, Inc.
By:
----------------------
Name:
--------------------
Title:
-------------------
<PAGE>
EXHIBIT 3
Bonus, Pension, Profit Sharing, Retirement, Stock Option Plans
Acquired Corporation: Reliance Technologies, Inc.
By:
----------------------
Name:
--------------------
Title:
-------------------
<PAGE>
Exhibit 4
The Reliance Technology Stock Option Plan
Exhibit 10.2
(Priority One Acquisition Contract)
PLAN AND AGREEMENT OF REORGANIZATION
under
SECTION 368(b) of the Internal Revenue Code
THIS AGREEMENT has been made and entered into this 9th day of April, 1999
(Closing Date), and is by and between, on the first part, CBQ, Inc., a publicly
held and traded Colorado corporation (CBQI), and, on the second part, Priority
One Electronic Commerce Corporation, a privately held Pennsylvania corporation
(POECC), and the shareholders of POECC (collectively, the Shareholders). The
following premises are an integral part of this agreement.
1. The Shareholders currently own all of the outstanding proprietary interest of
POECC (POECC Shares).
2. The Shareholders desire to sell, transfer and convey the POECC Shares to CBQI
solely in exchange for 900,000 restricted common shares of CBQI (CBQI Shares).
3. CBQI desires to acquire the POECC Shares solely in exchange for the CBQI
Shares.
4. CBQI, POECC and the Shareholders desire to effect the foregoing conveyances
and transfers of the CBQI and POECC Shares on a tax free basis pursuant to the
provisions of Section 368(b) of the Internal Revenue Code (IRC).
THE PARTIES, THEREFORE, hereby adopt this plan and reorganization agreement
(Agreement) under the IRC and agree as follows:
ARTICLE I
TRANSFER AND CONVEYANCE OF THE CBQI AND POECC SHARES; CONSULTING AGREEMENT
1.1 Transfer and Conveyance of Shares. Subject to all of the terms, conditions,
representations, warranties and covenants set forth herein, the Shareholders
hereby sell, transfer and convey (without reservation and free and clear from
all encumbrances) to CBQI the POECC Shares and CBQI hereby sells, transfers and
conveys (without reservation and free and clear from all encumbrances) to the
Shareholders the CBQI Shares.
1.2 Consulting Agreement of Mr. Lieberman. Mr. Sidney Lieberman has agreed to
serve CBQI as a consultant in exchange for an option to acquire 100,000 shares
of the common stock of CBQI at the market price therefor on the date of this
agreement, the market price being agreed as $3.00 per share. The common shares
which CBQI shall issue to Mr. Lieberman upon exercise of his option, in whole or
in part and from time to time and at any time, shall be forthwith registered by
CBQI under the Securities Act of 1933, as amended, using Form S 8.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. Representations, Warranties and Covenants of CBQI. CBQI represents and
warrants to the Shareholders, jointly and severally, as of the Closing Date as
follows: (a) All necessary action has been taken to make this Agreement a legal,
valid and binding obligation of CBQI enforceable in accordance with its terms
and conditions.
(b) The execution and delivery of this Agreement and the performance by CBQI of
its obligations hereunder will not result in any material breach or violation of
or material default under any material agreement, indenture, lease, license,
mortgage, instrument, or understanding, nor result in any violation of any law,
rule, regulation, statute, order or decree of any kind, to which CBQI or any of
its affiliates is a party or by which they or any of their property is or may be
or become subject, nor in the violation of the articles or bylaws governing the
conduct of CBQI.
(c) CBQI has delivered to POECC and the Shareholders its: (1) annual reports on
Form 10 KSB for the years ended December 31, 1997, and December 31, 1998; (2)
quarterly reports on Form 10 QSB for the fiscal quarters ended March 31, 1998,
June 30, 1998, and September 30, 1998, and (3) periodic report on Form 8 KSB
dated November 19, 1998 (as well as the amendment thereto), all of which were
true and correct as of the date of filing and remain true and correct in all
material respects as of the date hereof. CBQI has made no further filings under
the Securities Exchange Act of 1934, as amended, since its filing on Form 10 KSB
dated December 31, 1998. CBQI has also provided to POECC and the Shareholders
full access to any and all information they desired concerning the business and
operations of CBQI, and CBQI has made available to POECC and the Shareholders
such personnel as have been requested to answer any and all questions which
POECC and the Shareholders may have had concerning their investment in CBQI.
<PAGE>
(d) CBQI shall continue to file for so long as the CBQI Shares are restricted
securities under Rule 144 of the Securities Act such reports as are required
from time to time of CBQI under the Securities Exchange Act of 1934, as amended,
so as to allow for the sale of the CBQI Shares by the Shareholders under said
Rule 144.
(e) The CBQI Shares have each been validly issued and are fully paid for and
nonassessable.
(f) The CBQI Shares are not and shall not be or become subject to any lien,
encumbrance, security interest or financing statement whatsoever. Further, the
CBQI Shares are not the subject of any other agreement in regards thereof.
(g) CBQI has delivered an opinion of its counsel to the effect that the CBQI
Shares have been validly issued and are fully paid for and nonassessable.
(h) CBQI since the date of those reports filed as specified in paragraph 2.1(c)
of this Agreement has not suffered any material and adverse change in its
financial condition, working capital, assets, liabilities, reserves, business,
operations or prospects.
(i) There is no legal, administrative, arbitration or other proceeding, claim or
action of any nature or investigation pending or threatened against or involving
CBQI, or which questions or challenges the validity of this Agreement, or any
action to be taken by CBQI pursuant to this Agreement or in connection with the
transactions contemplated hereby, and CBQI does not know or have any reason to
know of any valid basis for any such legal, administrative, arbitration or other
proceeding, claim or action of any nature or investigation. CBQI is not subject
to any judgment, order or decree entered in any lawsuit or proceeding which has
an adverse effect on its business practices or on its ability to acquire any
property or conduct its business in any area.
(j) No representations or warranties by CBQI in this Agreement and no statement
contained in any document (including, without limitation, those which may be
attached hereto), certificate, or other writing furnished by CBQI to POECC or
the Shareholders pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contain any untrue statement of material fact
or omit to state any material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading; further, there are no facts known to CBQI which (either individually
or in the aggregate) could or would materially and adversely affect or involve
any substantial possibility of having a material, adverse effect upon the
condition (financial or otherwise), results of operations, assets, liabilities
or businesses of CBQI which have not been disclosed in this Agreement.
(k) CBQI specifically acknowledges and represents that the closing hereunder
was, in effect, simultaneously completed on the effective date hereof.
2.2 Representations, Warranties and Covenants of POECC and the Shareholders.
POECC and the Shareholders each hereby represents and warrants, jointly and
severally, to CBQI as of the Closing Date as follows:
(a) All necessary action has been taken to make this Agreement a legal, valid
and binding obligations of POECC and the Shareholders enforceable in accordance
with its terms and conditions.
(b) The execution and delivery of this Agreement and the performance by POECC
and the Shareholders of their respective obligations hereunder will not result
in any material breach or violation of or material default under any material
agreement, indenture, lease, license, mortgage, instrument, or understanding,
nor result in any violation of any law, rule, regulation, statute, order or
decree of any kind, to which either POECC and/or the Shareholders or any of
their respective affiliates is a party or by which they or any of them or any of
their property is or may be or become subject, nor in the violation of the
articles or bylaws governing the conduct of either POECC or the Shareholders.
<PAGE>
(c) POECC and the Shareholders have delivered to CBQI compiled financial
statements of POECC as of and for the period ended December 31, 1997, a copy of
which is attached to this Agreement. POECC shall subsequently forthwith deliver
compiled financial statements as of and for the period ended December 31, 1998.
The foregoing POECC financial statements shall be prepared, if they have not
already been so, in order to provide, at a minimum, (1) balance sheets dated as
of December 31, 1997, and December 31, 1998; (2) statements of operations for
the one year periods ended December 31, 1996, December 31, 1997, and December
31, 1998; (3) statements of cash flows for the one year periods ended December
31, 1996, December 31, 1997, and December 31, 1998; and (4) a statement of
stockholders' equity from inception through December 31, 1998. The POECC
financial statements attached to this Agreement and which shall be subsequently
delivered (1) are and will be true, accurate and complete; (2) have been and
will be prepared from all relevant books and records pertaining to POECC; (3)
have been or will be prepared in accordance with Generally Accepted Accounting
Principles applied on a consistent basis; and (4) have been or will be prepared
in accordance with Regulation S X under the general rules and regulations
promulgated by the Securities and Exchange Commission pursuant to the authority
granted this governmental agency under the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended. The POECC financial
statements undertaken by POECC and the Shareholders to be delivered in
accordance with this Agreement shall be subsequently submitted by the Company to
an audit by the independent auditing firm of the Company. These financial
statements are capable of being audited, no material and adverse changes shall
occur as a result of any adjustments provided by said auditor and the opinion
for these financial statements shall not be qualified in any respect.
The foregoing financial statements will show that POECC has no liabilities of
any kind whatsoever, other than those liabilities which have been satisfied as
of the Closing Date and those obligations to Shareholders, including Mr.
Lieberman and/or his affiliates, which have been satisfied as of the Closing
Date. POECC has acquired, as of the Closing Date and free and clear of all
liens, obligations, rights and other commitments, common shares in CITX, Inc.,
which aggregate 10% of the outstanding common shares of CITX. Further, as of the
Closing Date, POECC has no debt obligation for borrowed money, including
guarantees of or agreements to acquire any such debt obligation of others and
POECC has no outstanding loan to any person.
POECC has not suffered, since December 31, 1997, and to the Closing Date, any
material and adverse change in its financial condition, working capital, assets,
liabilities, reserves, business, operations or prospects.
(d) POECC has no employment agreement with any officer, employee or agent. POECC
is not restricted by agreement from carrying on its business or any part thereof
anywhere in the world or from competing in any line of business with any person.
POECC has no obligation or liability as guarantor, surety, co signor, endorser,
co maker, indemnitor or otherwise in respect of the obligation of any other
person. POECC is not subject to any obligation or requirement to provide funds
to or make any investment (in the form of a loan, capital contribution or
otherwise) in any person. POECC is not a party to any agreement, contract,
commitment or loan to which any of its officers or directors or any affiliate of
POECC or its officers and directors is a party.
(e) POECC has delivered an accurate and complete list of all leases pursuant to
which POECC leases any real or personal property. POECC has also delivered an
accurate and complete list of all licenses pursuant to which POECC licenses or
has acquired the right to use any software or other intangible property. All
such leases and licenses are valid, binding and enforceable in accordance with
their terms, and are in full force and effect. There are no existing defaults by
POECC or any other party under these leases, and no event of default has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default thereunder. Any
consents under these leases or licenses have been acquired.
(f) POECC has delivered a list of the customers of POECC showing the approximate
total sales by POECC to each customer during the fiscal year ended December 31,
1988. There has been no adverse change in the business relationship of POECC
with any customer which is material to the consolidated financial condition or
operations of Target.
(g) POECC has duly filed all federal, state and local tax reports and returns
required to be filed by it and has duly paid all taxes and other charges due or
claimed to be due from it by federal, state, local and foreign taxing
authorities. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any federal, state, local, or
foreign tax return or report for any period.
<PAGE>
(h) All accounts receivable of POECC represent sales actually made in the
ordinary course of business, and are current and collectible.
(i) There is no legal, administrative, arbitration or other proceeding, claim or
action of any nature or investigation pending or threatened against or involving
POECC, or which questions or challenges the validity of this Agreement, or any
action to be taken by POECC pursuant to this Agreement or in connection with the
transactions contemplated hereby, and POECC does not know or have any reason to
know of any valid basis for any such legal, administrative, arbitration or other
proceeding, claim or action of any nature or investigation. POECC is not subject
to any judgment, order or decree entered in any lawsuit or proceeding which has
an adverse effect on its business practices or on its ability to acquire any
property or conduct its business in any area.
(j) The POECC Shares have each been validly issued and are fully paid for and
nonassessable.
(k) The POECC Shares are not and shall not be or become subject to any lien,
encumbrance, security interest or financing statement whatsoever. Further, the
POECC Shares are not the subject of any other agreement in regards thereof.
(l) The POECC Shares represent 100% of the outstanding proprietary interest of
POECC, and there are no outstanding commitments (direct or indirect) which would
cause the issuance or transfer out of treasury of any additional proprietary
interest of POECC, whether common stock, preferred stock or debt.
(m) The Shareholders and POECC have provided to CBQI full access to any and all
information it desired concerning the business and operations of the
Shareholders and/or POECC, and the Shareholders and POECC have made available to
CBQI such personnel as has been requested to answer any and all questions which
CBQI may have had concerning its investment in POECC.
(n) CBQI has delivered an opinion of its counsel to the effect that the CBQI
Shares have been validly issued and are fully paid for and nonassessable.
(o) No representations or warranties by POECC in this Agreement and no statement
contained in any document (including, without limitation, financial statements),
certificate, or other writing furnished by POECC or the Shareholders to CBQI
pursuant to the provisions hereof or in connection with the transactions
contemplated hereby, contain any untrue statement of material fact or omit to
state any material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading; further, there are no facts known to POECC which (either
individually or in the aggregate) could or would materially and adversely affect
or involve any substantial possibility of having a material, adverse effect upon
the condition (financial or otherwise), results of operations, assets,
liabilities or businesses of POECC which have not been disclosed in this
Agreement.
(p) POECC and the Shareholders each specifically acknowledge and represent that
the closing hereunder was, in effect, simultaneously completed on the effective
date hereof.
2.3 Understandings of the Shareholders. The Shareholders acknowledge, understand
and agree that:
(a) The certificate representing the CBQI Shares will bear a legend restricting
its transfer under Rule 144 of the Securities Act of 1933, as amended, and will
be issued solely in the name of the Shareholders.
<PAGE>
(b) The CBQI Shares have not been registered under the Securities Act of 1933,
as amended, or any applicable state law (collectively, the Securities Act);
further, the CBQI Shares may not be sold, offered for sale, transferred,
pledged, hypothecated or otherwise disposed of except in compliance with the
Securities Act; further, CBQI has no obligation, and does not intend, to cause
the CBQI Shares to be registered under the Securities Act, or to comply with any
exemption under the Securities Act that would permit a sale or sales of all or
any portion of the CBQI Shares; further, the legal consequences of the foregoing
mean that the Shareholders must bear the economic risk of the investment in the
CBQI Shares for an indefinite period of time; and, further, if the Shareholders
desire to sell or transfer all or any part of the CBQI Shares within the
restricted period, CBQI may require the Shareholders' counsel to provide a legal
opinion that the transfer may be made without registration under the Securities
Act.
(c) No federal or state agency has made any findings or determination as to the
fairness of an investment in CBQI, or any recommendation or endorsement of this
investment.
(d) There is presently only an extremely limited market for the CBQI Shares and
no market may exist in the future for any sale or sales of all or any portion
thereof.
(e) Their commitments to investments that are not readily marketable are not
disproportionate to their net worth, and their investment in the CBQI Shares
will not cause such overall commitment to become excessive.
(f) They have the financial ability to bear the economic risks of this
investment, have adequate means of providing for their current needs, and have
no need for liquidity in this investment.
(g) They have evaluated the high risks of investing in the CBQI Shares and have
such knowledge and experience in financial and business matters in general and
in particular with respect to this type of investment that they are capable of
evaluating the merits and risks of an investment in the CBQI Shares.
(h) They have been given the opportunity to ask questions of and receive answers
from CBQI concerning the terms and conditions of this investment, and to obtain
additional information necessary to verify the accuracy of the information they
desired in order to evaluate their investment, and in evaluating the suitability
of an investment in the CBQI Shares have not relied upon any representations or
other information (whether oral or written) other than that furnished to them by
CBQI or the representatives of CBQI.
(i) They have had the opportunity to discuss with their professional, legal, tax
and financial advisers the suitability of an investment in the CBQI Shares for
its particular tax and financial situation and all information that they have
provided to CBQI concerning themselves and their financial position is correct
and complete as of the date set forth below.
(j) In making the decision to purchase the CBQI Shares they have relied solely
upon independent investigations made by them or on their behalf.
(k) They are acquiring the CBQI Shares solely for their own account, for
investment purposes only, and are not purchasing with a view to, or for, the
resale, distribution, subdivision or fractionalization thereof.
<PAGE>
ARTICLE III
MISCELLANEOUS
3.1. Entire Agreement; Modification. This Agreement sets forth and constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof, and supersedes any and all prior agreements, understandings,
promises, warranties, covenants and representations made by any party to the
other concerning the subject matter hereof and the terms applicable hereto. This
Agreement may not be released, discharged, amended or modified in any manner
except by an instrument in writing signed by duly authorized representations of
the parties hereto.
3.2. Severability. The invalidity or unenforceabilty of one or more provisions
of this Agreement shall not affect the validity or enforceability of any of the
other provisions hereof, and this Agreement shall be construed in all respects
as if such invalid or unenforceable provisions are omitted.
3.3. Governing Law. This Agreement shall be deemed to have been entered into and
shall be construed and enforced in accordance with the laws of the State of
Texas.
3.4. Waivers. The failure of any party hereto to insist, in any one or more
instances, upon the performance of any of the terms, covenants or conditions of
this Agreement or to otherwise exercise any right hereunder, shall not be
construed as a waiver or relinquishment of the future performance of any such
term, covenant or condition or the future exercise of such right, but the
obligations of the party with respect to such future performance shall continue
in full force and effect.
3.5. Headings. The headings in the articles, section and paragraphs used in this
Agreement are included for convenience only and are not to be used in construing
or interpreting this Agreement.
3.6. Notice. All notices, demands, or requests hereunder shall be in writing and
served either personally, by certified mail, return receipt requested, by
Federal Express or other reputable overnight courier, or by facsimile, as
follows:
If to CBQI:
CBQ, Inc.
4851 Keller Springs Rd., Ste. 213
Dallas TX 75248
(972) 732 1169: FAX
If to POECC or the Shareholders:
Priority One Electronic Commerce Corporation
c/o Mr. Sidney Lieberman
8699 Egret Isle Terrace
Lake Worth FL 33467
(561) 964 1233: FAX
3.7. Successor and Assigns. This Agreement, and each and every provision
thereof, shall be binding upon and shall inure to the benefit of the parties,
their respective successors, successors-in-title, heirs and assigns, and each
and every successor-in-interest to any party, whether such successor acquires
such interest by way of gift, purchase, foreclosure, or by any other legal
method, who shall hold such interest subject to all the terms and conditions of
this Agreement.
<PAGE>
3.8. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute one and the same instrument.
3.9. Attorneys' Fees. In the event of any dispute with respect to this
Agreement, the prevailing party shall be entitled to its reasonable attorneys'
fees and other costs and expenses incurred in resolving such dispute.
3.10. Expenses. Each party shall pay the expenses incurred by them under or in
connection with this Agreement, including counsel fees and expenses of their
respective representatives.
3.11. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants of CBQI, PEOC and the Shareholders
contained in this Agreement shall survive the execution hereof, and shall be
unaffected by any investigation made by any party at any time.
3.12. Further Assurances. At any time and from time to time after the date of
this Agreement, each party shall execute such additional instruments and take
such other and further action as may be reasonably requested by any other party
or otherwise to carry out the intent and purpose of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered the date first above written.
CBQ, INC., a Colorado corporation
By: /s/ Michael Sheriff
Michael Sheriff, CEO
PRIORITY ONE ELECTRONIC COMMERCE CORPORATION, a Pennsylvania corporation
By: /s/ Sidney Lieberman
Sidney Lieberman, President
SHAREHOLDERS:
Sidney Lieberman Revocable Trust Lenora J. Spera Trust
By: /s/ Sidney Lieberman By: /s/ Sidney Lieberman
Trustee Trustee
Howard Frank, Individually Bernie Roemmele, Individually
/s/ Howard Frank /s/ Bernie Roemmele
Howard Frank Bernie Roemmele
Randall King, Individually Timothy Classen, Individually
/s/ Randall King /s/ Timothy Classen
Randall King Timothy Classen
Richard Bergey, Individually Barbara Riehl, Individually
/s/ Richard Bergey /s/ Barbara Riehl
Richard Bergey Barbara Riehl
Exhibit 10.3
(Global Logistics Partners Acquisition Contract)
AGREEMENT OF PURCHASE
This plan and agreement of purchase (Plan) has been entered into in Dallas,
Texas, this 11th day of May, 1999, between CBQ, Inc., a Colorado corporation
referred to in this Agreement as either the Purchaser or CBQ, and Global
Logistics Partners, L.L.C., a Texas corporation sometimes referred to in this
agreement as Global or Seller.
CBQ will acquire (at the Closing) from Global 19% of the issued and outstanding
capital stock of Global Logistics Partners, L.L.C. in exchange for shares of
voting stock of CBQ.
ARTICLE I
EXCHANGE OF VOTING CAPITAL STOCK
1.01. Transfer and Delivery of Global Logistics Partners, L.L.C. Shares. At the
closing Global will Issue and deliver to CBQ certificates evidencing 19% of the
issued and outstanding Capital stock of Global Logistics Partners, L.L.C., in
the name of CBQ, Inc.
1.02. Issuance and Delivery of CBQ Shares. In exchange for the transfer by
Global to CBQ of 19% of the issued and outstanding Global Logistics Partners,
L.L.C. capital shares hereunder, CBQ will forthwith cause to be issued and
delivered to the Global 4,233,200 restricted common shares of CBQ (Collectively,
the CBQ Shares).
1.03. Additional Consideration for Issuance of CBQ Shares. As additional
consideration for CBQ entering into this agreement Rick Williamson (the
President and Major Shareholder of Global Logistics Partners, L.L.C.) agrees to
sit on the Board of Directors of CBQ, Inc., and to be appointed as President/CEO
of CBQ and its Subsidiary Cyberquest, Inc., (a Colorado Corporation.). In
addition he will form a management team which will include a CFO, Sales Manager,
and additional management personnel to cover all aspects of building CBQ and
BID4IT into a world class Internet auction site for Business to Business
transactions. CBQ shall make additional seats available on its Board of
Directors for nominees selected by Mr. Williamson. Mr. Williamson shall fund
(through loans or equity investments) the on going operations of CBQ.
1.04. Closing Date. The Closing Date will be May 10, 1999 at 4:00 PM at the
offices of CBQ in Dallas, Texas unless otherwise determined by Mutual agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND ACQUIRED CORPORATION
2.01. Organization and Standing. Global Logistics Partners, L.L.C. is a
corporation duly organized, validly existing and in good standing under the laws
of Texas, with all Corporate powers necessary to own property and carry on its
business as it is now being conducted. Copies of the articles of incorporation
and bylaws of Global Logistics Partners, L.L.C. delivered to Purchaser herewith
are complete and accurate as of the Closing Date.
2.02. Capitalization. Global Logistics Partners, L.L.C. has an outstanding
capitalization, which is all in the hands of the Shareholders, all of which has
been fully paid for and is non assessable. There are no outstanding
subscriptions, options, contracts, commitments or demands relating to the
capital stock of Global Logistics Partners, L.L.C. or any other agreements of
any character under which Global Logistics Partners, L.L.C. or the Shareholders
would be obligated to issue or purchase shares of Global Logistics Partners,
L.L.C. capital stock, except as described and disclosed on Exhibit 1 to this
Agreement.
<PAGE>
2.03. Litigation. Global Logistics Partners, L.L.C. is not a party to, nor has
it been threatened with, any litigation or governmental proceeding that, if
decided adversely to it, would have a material and adverse effect on its
operations or business, or on the financial condition, net worth, prospects or
business of Global Logistics Partners, L.L.C. To the best of the Global
Logistics Partners, L.L.C.'s knowledge, it is not aware of any facts that might
result in any action, suit or other proceeding that would result in any material
and adverse change in the business or financial condition of Global Logistics
Partners, L.L.C.
2.04. Compliance with Law and Instruments. The business and operations of Global
Logistics Partners, L.L.C. are not infringing on or otherwise acting adversely
to any copyrights, trademark rights, patent rights or licenses owned by any
other person, and there is not any pending claim or threatened action with
respect to such rights. Global Logistics Partners, L.L.C. is not obligated to
make any payments in the form of royalties, fees or otherwise to any owner of
any patent, trademark, trade name or copyright, except as set forth on Exhibit
2.
2.05. Authority. The execution and performance of this Agreement have been duly
authorized by all requisite corporate action. This Agreement constitutes a valid
and binding obligation of Global Logistics Partners, L.L.C. and the Shareholders
in accordance with its terms. No provision of the articles of incorporation,
bylaws, minutes, share certificates or contracts prevents Global Logistics
Partners, L.L.C. and/or the Shareholders from delivering the Global Logistics
Partners, L.L.C. shares to CBQ in the manner contemplated under the Plan.
2.06. Taxes. Global Logistics Partners, L.L.C. has filed all income tax returns
and, in each jurisdiction where qualified or incorporated, all income tax and
franchise tax returns that are required to be filed. Global Logistics Partners,
L.L.C. has paid all taxes as shown on the returns as have become due, and has
paid all assessments received that have become due.
2.07. Brokers. All negotiations on the part of Global Logistics Partners, L.L.C.
and the Shareholders related to the Plan have been accomplished solely by Global
Logistics Partners, L.L.C. and the Shareholders without the assistance of any
person employed as a broker or finder. Global Logistics Partners, L.L.C. and the
Shareholders have done nothing to give rise to any valid claims for a broker's
commission, finder's fee or any similar charge.
2.08. Full Disclosure. As of the Closing Date, Global Logistics Partners, L.L.C.
and the Shareholders have disclosed all events, conditions and facts materially
affecting the business and prospects of Global Logistics Partners, L.L.C. The
Shareholders and Global Logistics Partners, L.L.C. have not withheld knowledge
of any event, condition or fact that they have reasonable grounds to know may
materially affect the business and prospects of Global Logistics Partners,
L.L.C. None of the representations and warranties made by the Shareholders or
Global Logistics Partners, L.L.C. in this Agreement or in any instrument,
writing or other document furnished to CBQ contains any untrue statement of a
material fact, or fails to state a material fact.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01. Organization and Standing. CBQ is a corporation duly organized, validly
existing and in good standing under the laws of Colorado, with all corporate
powers necessary to own property and carry on its business as it is now being
conducted. Copies of the articles of incorporation and bylaws of CBQ delivered
to Global Logistics Partners, L.L.C. herewith are complete and accurate as of
the Closing Date. Global Logistics Partners has reviewed the latest 10KSB as
filed by CBQ for the period ended 12/31/98.
3.02. Subsidiaries. CBQ has subsidiaries.
3.03. Capitalization. The Capital structure of CBQ, Inc., is as set out in the
10KSB as filed for the period ending 12/31/98.
3.04. Due Delivery. The CBQ Shares issued to Global Logistics Partners LLC have
been validly authorized and issued and are fully paid for and non assessable. No
CBQ shareholder has any preemptive right of subscription or purchase with
respect to these shares.
<PAGE>
3.05. Authority. The execution and performance of this Agreement have been duly
authorized by all requisite corporate action. This Agreement constitutes a valid
and binding obligation of CBQ in accordance with its terms. No provision of the
articles of incorporation, bylaws, minutes, share certificates or contracts
prevents CBQ from delivering the CBQ shares in the manner contemplated under the
Plan.
3.06. Brokers. All negotiations on the part of CBQ related to the Plan have been
accomplished solely by CBQ without the assistance of any person employed as a
broker or finder. CBQ has done nothing to give rise to any valid claims for a
broker's commission, finder's fee or any similar charge.
3.07. Full Disclosure. As of the Closing Date, CBQ has disclosed all events,
conditions and facts materially affecting the business and prospects of CBQ, and
CBQ has not withheld knowledge of any event condition or fact that it has
reasonable grounds to know may materially affect the business and prospects of
CBQ. None of the representations and warranties made by CBQ in this Agreement or
in any instrument, writing or other document furnished to Global Logistics
Partners, L.L.C. contains any untrue statement of a material fact, or fails to
state a material fact.
ARTICLE IV
SURVIVAL OF WARRANTIES AND WARRANTIES
4.01. Nature and Survival of Representations and Warranties. All statements of
fact contained in this Agreement or in any memorandum, certificate, letter,
document or other instrument delivered by or on behalf of any of the parties
hereto to any other party pursuant to this Agreement shall be deemed
representations and warranties made by the delivering party to the other parties
under this Agreement. The covenants, representations and warranties of the
parties shall survive the Closing Date for a period of one year, and then they
shall lapse and be of no further effect.
4.02. Expenses. The parties to this Agreement shall pay their own expenses
incurred hereunder and in regards of the transactions contemplated hereby,
including, but not limited to, all fees and expenses of their respective counsel
and accountants.
ARTICLE V
COMPLIANCE WITH SECURITIES LAWS
5.01. Acknowledgments of the Shareholders. Global Logistics Partners LLC
acknowledges, understands and agrees that: (a) The certificates representing the
CBQ Shares will each bear a legend restricting transfer in accordance with the
exemptions from registration under the Securities Act of 1933, as amended, which
CBQ has relied upon in the issuance of the CBQ Shares. (b) The CBQ Shares have
not been registered under the Securities Act of 1933, as amended, or any
applicable state law (collectively, the Securities Act). (c) The CBQ Shares may
not be sold, offered for sale, transferred, pledged, hypothecated or otherwise
disposed of except in compliance with the Securities Act of 1933 or 1934. (d)
The legal consequences of the foregoing mean that Global must bear the economic
risk of the investment in the CBQ Shares for the requisite period of time. (e)
No federal or state agency has made any finding or determination as to the
fairness of an investment in CBQ, or any recommendation or endorsement of this
investment.
<PAGE>
ARTICLE VI
MISCELLANEOUS
6.01. Amendments. This Agreement may be amended or modified at any time, but
only by an instrument in writing executed by Global Logistics Partners, L.L.C.,
and CBQ.
6.02. Waiver. Global Logistics Partners, L.L.C. and/or CBQ may, in writing, (a)
extend the time for performance of any of the obligations of any other party to
this Agreement, (b) waive any inaccuracies or misrepresentations contained in
this Agreement or in any document delivered pursuant to this Agreement by any
other party and/or (c) waive compliance with any of the covenants, or
performance of any obligations, contained in this Agreement by any other party.
6.03. Assignment. (a) Neither this Agreement nor any right created hereby shall
be assignable by any party without the prior written consent of the other
parties, except by the laws of succession. (b) This Agreement shall be binding
on and inure to the benefit of the respective successors and assigns of the
parties. Nothing in this Agreement, expressed or implied, is intended to confer
upon any person, other than the parties and their permitted successors and
assigns, any rights or remedies under this Agreement.
6.04. Notices. Any notice or other communication required or permitted by this
Agreement must be in writing and shall be deemed to be properly given when
delivered in person to an officer of the other party, or to the party
individually when deposited in the U.S. Mails for transmittal by certified or
registered mail, postage prepaid, or when deposited with a public telegraph
company for transmittal, charges prepaid, or when delivered via facsimile;
provided, however, that the communication is addressed as follows:
in case of Global Logistics Partners, L.L.C. and the Shareholders:
6300 Ridglea Place
Suite 600
Fort Worth, TX 76116; (817) 737-6100; and
in case of CBQ:
4851 Keller Springs Rd.
Suite. 213
Addison, Texas 75001; (972) 732-1100
6.05. Headings. Paragraph and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
6.06. Entire Agreement. This Agreement contains the entire agreement between the
parties relating to the subject matter hereof. It may be executed in any number
of counterparts, but the aggregates of such counterparts constitute only one and
the same instrument.
<PAGE>
6.07. Partial Invalidity. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if it never contained any such invalid, illegal or unenforceable
provisions.
6.08. Controlling Law. The validity, interpretation and performance of this
Agreement shall be controlled by and construed under the laws of the State of
Texas, and venue for any lawsuit shall be in Dallas County, Texas.
6.09. Attorney's Fees. If any action at law or in equity, including any action
for declaratory relief, is brought to enforce or interpret the provisions of
this Agreement, the prevailing party shall be entitled to recover reasonable
attorney's fees from the other party. The attorney's fees may be ordered by the
court in the trial of any action described in this paragraph or may be enforced
in a separate action brought for determining attorney's fees.
6.10. Specific Performance. The parties declare that it is impossible to measure
in money the damages that will accrue to a party or its successors as a result
of any other parties' failure to perform any of the obligations under this
Agreement; therefore, if a party or its successor institutes any action or
proceeding to enforce the provisions of this Agreement, any party opposing such
action or proceeding agrees that specific performance may be sought and obtained
for any breach of this Agreement.
6.11. Arbitration. Any dispute relating to the interpretation or performance of
this Agreement shall be resolved at the request of either party through binding
arbitration. Arbitration shall be conducted in Dallas, Texas in accordance with
the then-existing rules of the American Arbitration Association. Judgment upon
any award by the arbitrators may be entered by any state or federal court having
jurisdiction. It is the intent of the parties to this Agreement that to
arbitrate be irrevocable.
Purchaser: CBQ, Inc.:
By: /s/ Michael L. Sheriff
Michael L. Sheriff, CEO
Seller: Global Logistics Partners, L.L.C.
By: /s/ Rick Williamson
Name: Rick Williamson
Title: President
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