XXXXXXX Xx. 0
XXXXXXXXX XX XXXXXXXX
This plan and agreement of purchase (Plan) has been adopted as a reorganization
under Section 368(b) of the Internal Revenue Code and has been entered into in
Dallas, Texas, this 19th day of November, 1998 (Closing Date), between Freedom
Funding, Inc., a Colorado corporation which has agreed to change its name to
CBQ, Inc., and which is sometimes referred to in this Agreement as either the
Purchaser or CBQ, CyberQuest, Inc., a Colorado corporation which is sometimes
referred to in this Agreement as either the Acquired Corporation or CyberQuest
and the shareholders of CyberQuest, all of whom are sometimes collectively
referred to in this Agreement as the Shareholders.
CBQ hereby acquires from the Shareholders all of issued and outstanding capital
stock of CyberQuest in exchange solely for shares of voting stock of CBQ. Under
this Plan, CyberQuest has become a subsidiary of CBQ.
ARTICLE I
EXCHANGE OF VOTING CAPITAL STOCK
1.01. Transfer and Delivery of CyberQuest Shares. Shareholders hereby transfer
and deliver to CBQ certificates evidencing all of the issued and outstanding
capital stock of CyberQuest 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 all of the issued and outstanding CyberQuest capital
shares hereunder, CBQ will forthwith cause to be forthwith issued and delivered
to the Shareholders (i) 18,000,000 restricted common shares of CBQ
(collectively, the CBQ Shares), and (ii) 70,000 shares of Class A Preferred
Stock. The foregoing share numbers reflect a reverse one for four (1:4) capital
share split which CBQ shall forthwith implement and make effective. CBQ shall
also forthwith and make effective a change of name from Freedom Funding, Inc.,
to CBQ, Inc.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND ACQUIRED CORPORATION
2.01. Organization and Standing. CyberQuest 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
CyberQuest 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 CyberQuest dated as of and for the three year or lesser
period, if inception occurred within three years, ended December 31, 1997, shall
forthwith be delivered to CBQ. CyberQuest 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 CyberQuest 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. CyberQuest
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. CyberQuest 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 CyberQuest or any other
agreements of any character under which CyberQuest or the Shareholders would be
obligated to issue or purchase shares of CyberQuest capital stock.
2.04. Title to Assets. CyberQuest 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 use of the
asset. Further, the assets of CyberQuest are in good condition and repair.
2.05. Schedule of Assets. CyberQuest 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 CyberQuest; (b) description of any real property in which CyberQuest has
a leasehold interest; (C) list of all capitalized equipment of CyberQuest 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 CyberQuest 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
CyberQuest; and (f) list of all interests in subsidiaries and/or joint ventures.
2.06. Liabilities. Except as set forth in the Balance Sheet, CyberQuest
presently has no outstanding indebtedness other than liabilities incurred in the
ordinary course of business. CyberQuest is not in default with respect to any
terms or conditions of any indebtedness. Further, CyberQuest has not made any
assignment for the benefit of creditors, nor has any involuntary or voluntary
petition in bankruptcy been filed by or against CyberQuest.
2.07. Litigation. CyberQuest 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 CyberQuest. To the
best of the CyberQuest'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 CyberQuest.
2.08. Compliance with Law and Instruments. The business and operations of
CyberQuest 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. CyberQuest 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.
2.09. Contractual Obligations. CyberQuest 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, (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 CyberQuest to a lien,
encumbrance. CyberQuest 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 default under any of the contracts, leases
or other arrangements by which it is bound. None of the parties with whom
CyberQuest has contractual arrangements are in default of their obligations.
2.10. Changes in Compensation. Since the date of the Balance sheet, CyberQuest
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 CyberQuest are complete 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 CyberQuest and the Shareholders in accordance with its
terms. No provision of the articles of incorporation, bylaws, minutes, share
certificates or contracts prevents CyberQuest and/or the Shareholders from
delivering the CyberQuest shares to CBQ in the manner contemplated under the
Plan.
2.13. Taxes. CyberQuest 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. CyberQuest 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 CyberQuest and the Shareholders
related to the Plan have been accomplished solely by CyberQuest and the
Shareholders without the assistance of any person employed as a broker or
finder. CyberQuest 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, CyberQuest and the Shareholders
have disclosed all events, conditions and facts materially affecting the
business and prospects of CyberQuest. The Shareholders and CyberQuest 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 CyberQuest.
None of the representations and warranties made by the Shareholders or
CyberQuest 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 CyberQuest herewith are complete and accurate as of the
Closing Date.
3.02. Subsidiaries. CBQ has no 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 outstanding is as set forth in the Form 10 QSB as of and for the nine
month period ended September 30, 1998, and, as of the Closing Date, no preferred
shares are issued and outstanding, all of which issued and outstanding common
shares are fully paid for and non assessable. There are no outstanding warrants,
options, contracts, calls, commitments or demands relating to the unissued
securities of CBQ.
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.
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
CyberQuest 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. (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.
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 CyberQuest, CBQ and each of the
individual Shareholders.
6.02. Waiver. The Shareholders, CyberQuest 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) Except as limited by subparagraph
(a), 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: (a) in case
of CyberQuest and the Shareholders: 0000 Xxxxxx Xxxxxxx Xx., Xxx. 000, Xxxxxx,
Xxxxx 00000; FAX: (000) 000 0000; and (b) in case of CBQ: 0000 Xxxxxxxx, Xxx.
0000, Xxxxxx, XX 00000; FAX (000) 000 0000.
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.
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.
Purchaser: Freedom Funding, Inc.:
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, President
Acquired Corporation: CyberQuest, Inc.:
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx, CEO
Shareholders:
Industrial Parts and Supplies, Inc.
By: /s/ Xxxx XxxXxxx, President
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Xxxx XxxXxxx, President
/s/ Xxxxxxx Jared
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Xxxxxxx Xxxxx
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
Midland, Inc.:
By: Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, President
CyberQuest, Ltd.:
By: CyberQuest Management Group, L.L.C.
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Its General Partner
By: X.X. Xxxxx
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X.X. Xxxxx, Its Manager
Xxxxxx Xxxxxx, CO UGMA
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx, CO UGMA
/s/ Xxxxxxxx X. Xxxx
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Xxxxxxxx X. Xxxx
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
