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 Xx. Xxxxxxxxx. Xx. Xxxxxx Xxxxxxxxx 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 Xx. Xxxxxxxxx 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.
(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.
(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 Xx.
Xxxxxxxxx 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 xxxxxx, 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.
(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.
(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.
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.
0000 Xxxxxx Xxxxxxx Xx., Xxx. 000
Xxxxxx XX 00000
(000) 000 0000: FAX
If to POECC or the Shareholders:
Priority One Electronic Commerce Corporation
c/o Xx. Xxxxxx Xxxxxxxxx
0000 Xxxxx Xxxx Xxxxxxx
Xxxx Xxxxx XX 00000
(000) 000 0000: 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.
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/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx, CEO
PRIORITY ONE ELECTRONIC COMMERCE CORPORATION, a Pennsylvania corporation
By: /s/ Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx, President
SHAREHOLDERS:
Xxxxxx Xxxxxxxxx Revocable Trust Xxxxxx X. Xxxxx Trust
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxxxx Xxxxxxxxx
Trustee Trustee
Xxxxxx Xxxxx, Individually Xxxxxx Xxxxxxxx, Individually
/s/ Xxxxxx Xxxxx /s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxx Xxxxxx Xxxxxxxx
Xxxxxxx Xxxx, Individually Xxxxxxx Xxxxxxx, Individually
/s/ Xxxxxxx Xxxx /s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxx Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxx, Individually Xxxxxxx Xxxxx, Individually
/s/ Xxxxxxx Xxxxxx /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxxx Xxxxxxx Xxxxx
