-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IDZbwErUxF7xGQPpghsKZ4FNK6IwksJX2mn1xowemBsDFzjH0E1dEiVzwc0uQfJQ db0F9c4Zl63fS4n1AvtaXg== 0001050502-00-000032.txt : 20000202 0001050502-00-000032.hdr.sgml : 20000202 ACCESSION NUMBER: 0001050502-00-000032 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000113 EFFECTIVENESS DATE: 20000113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CBQ INC CENTRAL INDEX KEY: 0000814926 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 841047159 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-94613 FILM NUMBER: 506925 BUSINESS ADDRESS: STREET 1: 4851 KELLER SPRINGS RD. STREET 2: SUITE 213 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 9727321100 MAIL ADDRESS: STREET 1: 4221 EAST PONTATOC CANYON DRIVE CITY: TUCSON STATE: AZ ZIP: 85718 FORMER COMPANY: FORMER CONFORMED NAME: FREEDOM FUNDING INC DATE OF NAME CHANGE: 19961205 S-8 1 FORM S-8 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CBQ, Inc. Exact name of registrant as specified in its charter) Colorado 84-0356301 (State or other jurisdiction of (IRS employer identification no.) incorporation or organization) 4851 Keller Springs, Ste. 228, Addison, TX 75248 (Address of Principal Executive Offices, including ZIP Code) 1999 Stock Option Plan (Full title of the plan) Mark S. Pierce, 1999 Broadway, Ste. 3235, Denver, Colorado 80202 (Name and address of agent for service) (303) 292-2992 (Telephone number, including area code, of agent for service)
=============================================================================================================== CALCULATION OF REGISTRATION FEE =============================================================================================================== Title of Securities Amount Proposed Maximum Offering Proposed Maximum Aggregate Amount of to be Registered to be Registered Price per Share Offering Price Registration Fee $.0001 par Value Common Stock 2,600,000 shares $2.125 per share $5,525,000 $1,584 - --------------------------------------------------------------------------------------------------------------- TOTALS 2,600,000 shares $5,525,000 $1,584 ===============================================================================================================
Total No. of Pages: 37; Exhibit Index on Page No.: 10 PROSPECTUS CBQ, INC. 4851 Keller Springs, Ste. 228, Addison, Texas 75248 (2,600,000 SHARES of Common Stock) This Prospectus relates to the CBQ, Inc., 1999 Stock Option Plan dated August 30, 1999 ("Plan"). Under the Plan, officers, directors, agents, consultants, advisors and employees of and to CBQ, Inc., a Colorado corporation ("Company"), and its subsidiaries are eligible to receive options to acquire shares of the $.0001 par value per share common stock of the Company ("Options" and "Common Stock," respectively). The Company is registering hereunder and then subsequently issuing up to 2,600,000 post-split shares of Common Stock to cover the Options granted over the term of the Plan. Options issued under the Plan and/or the underlying Common Stock may be or become subject to restrictions on transfer, and until any imposed restrictions lapse, are subject to forfeiture by the holder upon the occurrence of certain events. Options and Common Stock which are subject to forfeiture will be held in escrow by the Company until such time as the imposed restrictions lapse. (See "General Information Regarding the Plan - - Restrictions on Transfer; Voting and Dividend Rights" and "General Information Regarding the Plan - Forfeiture.") Sales of Options and the underlying Common Stock by "affiliates," as defined in ARules 405 and 144" under the Securities Act of 1933, as amended ("Securities Act"), may not be made without compliance with the registration and prospectus delivery requirements of the Securities Act, or an exemption therefrom, such as that provided by Rule 144. The sale of shares by participants who are not affiliates may be effected without complying with these requirements. Affiliates may also be subject to Section 16(b) of the Securities Exchange Act of 1934, as amended ("Exchange Act"). If so, such participants must comply with the provisions of that section of the Exchange Act as well. (See "General Information Regarding the Plan - Restrictions on Resales by Affiliates.") This Prospectus is part of a Registration Statement which was filed and became effective under the Securities Act, and does not contain all of the information set forth in the Registration Statement, certain portions of which have been omitted pursuant to the rules and regulations promulgated by the U.S. Securities and Exchange Commission (the "Commission") under the Securities Act. The statements in this Prospectus as to the contents of any contracts or other documents filed as an exhibit to either the Registration Statement or any other filings by the Company with the Commission which are incorporated herein are qualified in their entirety by reference thereto. A copy of any document or part thereof incorporated by reference in this Prospectus but not delivered herewith will be furnished without charge upon written or oral request. Requests should be addressed to: Management Compensation Committee, c/o CBQ, Inc., 4851 Keller Springs, Ste. 228, Addison, TX 75248, (972) 732-1100. The Company is subject to the reporting requirements of the Exchange Act and in accordance therewith files reports and other information with the Commission. These reports, as well as the proxy statements, information statements and other information filed by the Company under the Exchange Act, if any, may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies may be obtained at the prescribed rates. In addition, copies of these reports, proxy statements, information statements and other information may also be examined at the offices of the National Association of Securities Dealers, Inc. ("NASD"), at 1735 K St., N.W., Washington, D.C. 20549. No person has been authorized to give any information or to make any representation, other than those contained in this Prospectus, and, if given or made, such other information or representation must not be relied upon as having been authorized by the Company. This Prospectus does not constitute an offer or a solicitation by anyone in any state in which such is not authorized or in which the person making such is not qualified or to any person to whom it is unlawful to make an offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstance, create an implication that there has not been a change in the affairs of the Company since the date hereof. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is January 11, 2000 TABLE OF CONTENTS GENERAL INFORMATION REGARDING THE PLAN.......................................1 Issuer..................................................................1 Purposes................................................................1 Term; Shares of Common Stock Subject to Plan............................1 Administration..........................................................1 Eligible Participants; Non-Qualified Options; Exercise Price; Term of Options; Tax Effects............................................1 Consideration for Options...............................................1 Restrictions on Transfer; Voting and Dividend Rights....................1 Forfeiture..............................................................2 Recapitalizations; Reorganizations and the Like.........................2 Exercise of Stock Options...............................................2 Restrictions on Resales by Affiliates...................................2 DOCUMENTS INCORPORATED BY REFERENCE AND ADDITIONAL INFORMATION...............2 Indemnification.........................................................3 INFORMATION NOT REQUIRED IN PROSPECTUS.......................................3 Item 3. Incorporation of Documents by Reference........................3 Item 4. Description of Securities......................................3 Item 5. Interests of Named Experts and Counsel.........................3 Item 6. Indemnification of Directors and Officers......................3 Item 7. Exemption from Registration Claimed............................4 Item 8. Exhibits.......................................................4 Item 9. Undertakings...................................................5 GENERAL INFORMATION REGARDING THE PLAN Issuer. The Company will be the issuer of the Options and the underlying Common Stock on exercise. The Company maintains its principal executive offices at 4851 Keller Springs, Ste. 228, Addison, TX 75248, (303) 732-1100. Purposes. The Plan was adopted on August 30, 1999, by the "Board of Directors," and is intended to provide a method whereby persons who are interested in the well being of the Company may be stimulated by personal involvement in the future prosperity of the Company, thereby advancing the interests of the Company and its shareholders. Term; Shares of Common Stock Subject to Plan. The Plan has a ten year term which began on August 30, 1999. The Plan authorizes the issuance and delivery of up to 2,600,000 shares of Common Stock. No shares had been issued under the Plan as of the date of this Prospectus. Administration. The Plan is initially being administered by the Board of Directors, which may subsequently appoint a committee for this purpose. (For purposes of this paragraph only, any reference to the Board of Directors also includes such committee.) The Board of Directors has full authority to determine the recipients and the Options awarded under the Plan, and may impose restrictions on the transfer of Options and/or the underlying Common Stock. The Board of Directors interprets and constructs the provisions of the Plan, is authorized to adopt rules and regulations for administering the Plan and may amend the Plan in any respect at any time. The date upon which Options become exercisable, their exercise price, the basis for determining the price, whether and under what circumstances the price may be modified, the maximum amount which may be exercised in any year, whether such amount is cumulative and the period during which all Options must be exercised will be determined in the sole discretion of the Board of Directors in accordance with the terms and conditions of the Plan. The Board of Directors may also amend the Plan from time to time in their sole discretion, but such amendments will only apply prospectively. Eligible Participants; Non-Qualified Options; Exercise Price; Term of Options; Tax Effects. All full-time employees of the Company and/or of its subsidiaries are eligible as participants in the Plan. Also eligible under the Plan are any other persons specified under the General Instructions to Form S-8 under the Securities Act. Awards under the Plan will be based upon the contributions made by each eligible person to the Company and/or its subsidiaries. Options granted under this Plan will not be qualified under the Employee Retirement Income Security Act of 1974, as set forth in the Internal Revenue Code. There is no limitation to the aggregate fair market value of the Common Stock underlying Options granted to any individual in a single calendar year under the Plan. Options will have no more than a ten-year term. A recipient of Options and the underlying Common Stock on exercise may incur income tax on the difference between the fair market value of the security received on the date of receipt and the cost to the recipient of the security; provided, however, that no tax will be incurred until any and all provisions on forfeiture, if significant, have lapsed. Each recipient of Options should consult his or her tax advisor as to the consequences of grant and exercise, as such consequences depend entirely upon the terms and conditions of the grant and the circumstances of the recipient at the date of grant and exercise. Consideration for Options. Options awarded under the Plan will be issued in consideration of cash, securities, instruments and/or services rendered by the participant for and on behalf of the Company and/or its subsidiaries. Restrictions on Transfer; Voting and Dividend Rights. Each participant immediately becomes the record and beneficial owner of the Options awarded to him or her under the Plan on the date of award, although the Board of Directors may impose forfeiture provisions to take effect after the date of grant. Options are not transferable, other than by will or the laws of descent and distribution. The Board of Directors will maintain possession of the certificate representing the Option until exercised. On exercise of an Option, the holder of the Common Stock received immediately becomes the record owner of the shares and acquires all beneficial rights of ownership, although the Board of Directors may impose forfeiture provisions to take effect after the date of exercise. If forfeiture provisions are imposed, the Board of Directors will maintain possession of the certificate representing the shares until the provisions on forfeiture lapse. After exercise, the holder is entitled to all of the rights of ownership, including the right to vote any shares of Common Stock awarded and to receive ordinary cash dividends, subject to any restrictions on forfeiture imposed. 1 The Board of Directors may impose a vesting schedule as to any Option upon award and as to any shares of underlying Common Stock upon exercise, and may at any time modify the schedule as to which restrictions upon transfer have not yet lapsed. Any restriction or forfeiture provisions which may be imposed may lapse earlier under certain circumstances. (See "Recapitalizations, Reorganizations and the Like.") Forfeiture. In the event that an employee ceases to be employed by the Company or any of its subsidiaries for any reason whatsoever, except termination for death or permanent or total disability, while holding one or more Options or non-vested shares of Common Stock, the employee will have the right to exercise the Option on the termination date only to the extent then exercisable and only with respect to the unexercised portion thereof and all rights to non-vested shares of Common Stock on the termination date will lapse. If the employee dies or becomes permanently or totally disabled while employed by the Company or any of its subsidiaries, the guardian, legal administrator, personal representative or administrator of the estate for the person will have the right to exercise any outstanding Option in full regardless of any other terms or conditions and any non-vested shares of Common Stock will vest in full. No transfer of an Option or non-vested Common Stock by will or by the laws of descent and distribution will be effective to bind the Company unless the Company has been furnished with written notice and an authenticated copy of the will and/or such other evidence as the Board of Directors may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Option and/or non-vested Common Stock. Recapitalizations; Reorganizations and the Like. In the event the outstanding Common Stock is subsequently changed into or exchanged for a different number or kind of shares or other securities, a prompt and equitable adjustment will be made in the aggregate number and kind of shares of non-vested Common Stock and shares subject to unexercised Options. Further, upon dissolution or liquidation of the Company, each outstanding and unexercised Option and non-vested share of Common Stock will immediately become exercisable or vest, as the case may be. The foregoing adjustments will be determined solely by the Board of Directors, whose determination will be final, binding and conclusive. Exercise of Stock Options. Exercise of an Option may be had, either in whole or in part, through the payment of the exercise price applicable to the number of shares of Common Stock to be acquired, either in cash or by cashier's check, certified check, bank draft or money order made payable to the order of the Company or by the delivery of instruments or securities. Restrictions on Resales by Affiliates. In the event that an affiliate of the Company acquires Common Stock, whether by direct grant or the exercise of an Option, the affiliate will be subject to Section 16(b) of the Exchange Act. This means that the affiliate could not sell any shares acquired under the Option for a period of six months thereafter. Further, in the event that the optionee had sold any shares of Common Stock in the previous six months preceding the receipt or exercise of the Option, any so called "profit," as computed under Section 16(b) of the Exchange Act, would be required to be disgorged from the optionee by the Company or the Commission. Common Stock acquired on exercise of an Option by other than affiliates are not subject to Section 16(b) of the Exchange Act. Participants should consult their counsel as to the effects and application of Section 16(b) of the Exchange Act on them. DOCUMENTS INCORPORATED BY REFERENCE AND ADDITIONAL INFORMATION The Company incorporates by reference (i) its annual report on Form 10-KSB for the year ended December 31, 1998, filed pursuant to Section 13 of the Exchange Act, (ii) any and all Forms 10-QSB under the Exchange Act subsequent to any filed Form 10-KSB, as well as all other reports filed under Section 13 of the Exchange Act, and (iii) its annual report, if any, to shareholders delivered pursuant to Rule 14a-3 of the Exchange Act. In addition, all further documents filed by the Company pursuant to Sections 13, 14, or 15(d) of the Exchange Act prior to the termination of this offering are deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing. 2 A copy of any document or part thereof incorporated by reference in the Registration Statement but not delivered with this Prospectus will be furnished without charge upon written or oral request. Requests should be addressed to: Management Compensation Committee, CBQ, Inc., 4851 Keller Springs, Ste. 228, Addison TX 75248, (972) 732-1100. A copy of the Company's most recent Forms 10-KSB and 10-QSB accompanies the copy of this Prospectus when furnished to those Plan participants not otherwise receiving a copy thereof. The Company will promptly furnish, without charge, an additional copy to any participant who requests it. Indemnification. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, or persons controlling the Company, the Company has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 3. Incorporation of Documents by Reference. Registrant hereby states that (i) all documents and statements set forth in (a) through (b), below, are incorporated by reference in this registration statement, and (ii) all documents subsequently filed by registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be a part hereof from the date of filing of such documents. (a) Registrant's latest annual report, whether of nor filed pursuant to Sections 13(a) or 15(d) of the Exchange; (b) All other reports filed pursuant to Sections 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the registrant documents referred to in (a), above. Each common share currently outstanding is fully paid for and nonassessable, and is entitled to one vote per share on all matters submitted for action by shareholders. All common shares are equal to each other with respect to the election of directors and cumulative voting is not permitted; therefore, the holders of more than 50% of the outstanding common shares can, if they choose to do so, elect all directors. The terms of directors are not staggered. Directors are elected annually to serve until the next annual meeting of shareholders and until their successors are elected and qualified. There are no preemptive rights to purchase any additional shares of common or other securities of registrant. In the event of liquidation or dissolution, holders of common shares are entitled to receive, pro rata, the remaining assets after creditors and holders of any class of stock having liquidation rights senior to holders of common have been paid in full. Reference is made to the description of the common shares prepared in compliance with Item 202 of Regulation S-K in the Form 10 filed with the U.S. Securities and Exchange Commission to register such shares under Section 12 of the Exchange Act. Item 4. Description of Securities. Not Applicable. Item 5. Interests of Named Experts and Counsel. Counsel has been granted an option to acquire 11,765 shares of common stock at the offering price set forth on the cover sheet of this registration statement. These options were acquired in lieu of compensation for services rendered the Company for the purposes allowed under the provision of this form. Counsel has informed the Company of his intention to exercise these options, providing as payment the satisfaction of funds previously advanced the Comany. Item 6. Indemnification of Directors and Officers. The only statute, charter provision, bylaw, contract, or other arrangement under which any controlling person, director or officer of registrant is insured or indemnified in any manner against any liability which they may incur in their capacity as such is set forth under the Delaware Corporation Code, as enacted 3 and in effect upon adoption of the registrant's articles of incorporation and bylaws, both of which mirror this statute. The statute and said articles in substance provide, in part and summary, as follows; however, this summary is qualified in its entirety by reference to the specific statutory provision: The provisions of this code generally provide that registrant may, but is not obligated to, indemnify against liability an individual made a party to a lawsuit because they were previously or are currently a director or officer of registrant, if such person acted in good faith and reasonably believed their actions were in the best interests of registrant. Registrant may not indemnify such persons if they are found liable to registrant in a shareholders' derivative suit or are found liable for receiving an improper personal benefit. Registrant is required to indemnify such persons if they are ultimately successful in the suit. Pending a final determination, registrant may advance funds to these persons, but only if provision is made for return of the funds advanced in the event such persons are subsequently found to not be entitled to indemnification as set forth above. The general effect of this statute is to make indemnification available to the officers and directors of registrant regarding actions taken in their official capacity, unless they are found liable to registrant for their actions, they received an improper benefit therefrom, or they did not act in good faith while reasonably believing their actions were in the best interests of registrant. Indemnification under this section would include actions of the officers and directors of registrant taken in connection with this offering. Item 7. Exemption from Registration Claimed. Not Applicable. Item 8. Exhibits. The following exhibits are filed as part of this registration statement pursuant to Item 601 of Regulation S-KSB and are specifically incorporated herein by this reference: Exhibit No. 1. Not Required. 2. Not Required. 3. Not Required. 4. Not Applicable. 5. Opinion of special counsel to the registrant regarding the legality of the securities registered. 6. Not Required. 7. Not Required. 8. Not Required. 9. Not Required. 10.1 1999 Stock Option Plan. 10.2 Employment Agreement with John C. Harris 10.3 Employment Agreement with Greg Allen 11. Not Required. 12. Not Required. 13. Not Required. 14. Not Required. 15. Not Applicable. 16. Not Required. 17. Not Required. 18. Not Required. 19. Not Required. 20. Not Required. 21. Not Required. 22. Not Required. 23. Not Required. 24.1 Consent of special counsel to registrant to the use of his opinion with respect to the legality of the securities being registered hereby and to the references to him in the Prospectus, if any, filed as a part hereof. (See Exhibit 5.) 4 24.2 Consent of Halliburton, Hunter & Associates, auditors to registrant, to the incorporation by reference of their audit opinion from the Form 10-KSB for the period ended December 31, 1998. 25. Not Applicable. 26. Not Required. 27. Not Applicable. 28. Not Applicable. 29. Not Applicable. Item 9. Undertakings. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of registrant pursuant to the foregoing provisions, or otherwise, registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other that the payment by registrant of expenses incurred or paid by a director, officer or controlling person of registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to: (i) include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in the registration statement; and (iii) include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the Registration Statement, including, but not limited to, any addition or deletion of a managing underwriter. (2) that, for the purpose of determining any liability under the Securities Act, each post-effective amendment to the registration statement shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of registrant's annual report pursuant to section 13(a) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 5 SIGNATURES In accordance with the requirements of the Securities Act of 1933, registrant has duly caused this registration statement to be signed on its behalf by the undersigned in Dallas, Texas, on the 10th day of January, 2000. CBQ, INC. (Registrant) By: /s/ John Harris - ------------------- John Harris, Chief Executive Officer By: /s/ John Harris - ------------------- John Harris, Chief Financial and Accounting Officer and Treasurer Pursuant to the requirements of the 1933 Act, this Registration Statement or amendment has been signed by the following persons in the capacities and on the dates indicated. /s/ John Harris - --------------- John Harris, Director Date: January 10, 2000 /s/ Greg Allen - -------------- Greg Allen, Director Date: January 10, 2000 6 FORM S-8 REGISTRATION STATEMENT EXHIBIT INDEX The following Exhibits are filed as part of this registration statement pursuant to Item 601 of Regulation S-K and are specifically incorporated herein by this reference: Exhibit Number in Registration Statement Description - ------------------------- ----------- 5 Opinion of Counsel 10.1 1999 Stock Option Plan 10.2 Employment Agreement with John C. Harris 10.3 Employment Agreement with Greg Allen 24 Consent to Use of Opinion 7 EX-5 2 EXHIBIT 5 EXHIBIT 5 Opinion of Counsel January 10, 2000 HAND DELIVERED Board of Directors, CBQ, Inc. 4851 Keller Springs, Ste. 228 Addison TX 75248 Re: CBQ, Inc. (Company)/Registration Statement on Form S-8 Ladies and Gentlemen: As counsel for the Company, I am furnishing this opinion to you in compliance with the referenced matter. I am familiar with the articles of incorporation of the Company and its corporate powers, franchises and other rights under which it carries on its business, as well as its Bylaws, minute book and other corporate records of the Company. For the purpose of the opinions expressed below, I have examined, among other things, the registration statement on Form S-8 to be filed in regards of the above offering (Registration Statement), and have supervised proceedings taken in connection with the authorization, execution and delivery by the Company of the Registration Statement and, as contemplated thereby, the authorization and issuance of the shares of common stock to be issued thereunder. In arriving at the opinions set forth below, I have examined and relied upon originals or copies, certified or otherwise identified to my satisfaction, of all such corporate records and all such other instruments, documents and certificates of public officials, officers and representatives of the Company and of other persons and have made such investigations of law as I have considered necessary or appropriate as a basis for my opinions. Moreover, I have with your approval relied as to factual matters stated therein on the certificates of public officials, and I have assumed, but not independently verified, that the signatures on all documents which I have examined are genuine and that the persons signing such had the capacity to do so. This opinion further expressly assumes that the shares covered by the Registration Statement will be issued in conformity with the terms and conditions applicable thereto. Based upon and subject to the forgoing, I am of the opinion that the issuance and sale of the stock in this offering have been duly and validly authorized and upon delivery to the shareholders in accordance with the terms and conditions of the exhibits to the Form S-8 will have been duly authorized, validly issued, fully paid for and not assessable. I am admitted to practice before the Bar of the State of Colorado only. I am not admitted to practice in any other jurisdiction in which the Company may own property or transact business. My opinions are with respect to federal law only and, to the extent my opinions are derived from laws of other jurisdictions, are based on an examination of relevant authorities and are believed to be correct, but I have not directly obtained legal opinions as to such matters from attorneys licensed in such other jurisdictions. My opinions are qualified to the extent that the enforcement of rights and remedies are subject to bankruptcy, insolvency and other laws of general application affecting the rights and remedies of creditors and security holders and to the extent that the availability of the remedy of specific enforcement or of injunctive relieve is subject to the discretion of the court before which any proceeding thereof may be brought. This opinion is furnished by me to you as counsel for the Company and it is solely for your benefit. This opinion is not to be used, circulated, quoted or otherwise referred to for any other purpose, other than as set forth in my consent to the use of the same in the Form S-8. I hereby consent to the filing of this letter with the Commission as Exhibit 5.1 to the Registration Statement. In giving this consent, I do not admit that I am included in the category of persons whose consent is required under Section 7 of the Securities Act of 1933 or the rules and regulations of the Commission. Very truly yours, /s/ Mark S. Pierce - ------------------ Mark S. Pierce EX-10.1 3 EXHIBIT 10.1 EXHIBIT 10.1 1999 Stock Option Plan CBQ, INC. 1999 STOCK OPTION PLAN (August 30, 1999) 1. Purpose of the Plan. The purpose of the CBQ, Inc., 1999 Stock Option Plan ("Plan") is to advance the interests of CBQ, Inc., a Colorado corporation ("Company"), by providing an opportunity for ownership of the stock of the Company by employees, agents and directors of, and consultants to, the Company and its subsidiaries. By providing an opportunity for such stock ownership, the Company seeks to attract and retain qualified personnel, and otherwise to provide additional incentive to promote the success of its business. 2. Stock Subject to the Plan. (a) The total number of shares of the authorized but unissued or treasury shares of the common stock of the Company ("Common Stock") for which options may be granted under the Plan (individually, an "Option" and, collectively, "Options") shall be 2,600,000 shares, subject to adjustment as provided in Section 13 hereof. (b) If an Option expires or terminates for any reason without having been exercised in full, the unpurchased shares shall again be available for subsequent Option grants under the Plan. (c) Common Stock issuable on exercise of an Option may be subject to such restrictions on transfer, repurchase rights or other restrictions as shall be determined by the Board of Directors of the Company ("Board"). 3. Administration of the Plan. The Plan shall be administered by the Board, unless it expressly establishes a committee for this purpose. No member of the Board shall act on any matter exclusively affecting any Option granted or to be granted to himself or herself under the Plan. A majority of the members of the Board shall constitute a quorum, and any action may be taken by a majority of those present and voting at any meeting. The decision of the Board as to all questions of interpretation and application of the Plan shall be final, binding and conclusive on all persons. The Board, in its sole discretion, may grant Options to purchase shares of Common Stock, and the Board shall issue shares upon exercise of Options as provided in the Plan. The Board shall have the authority, subject to the express provisions of the Plan, to construe Option agreements and the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of Option agreements, which may but need not be identical, and to make all other determinations in the judgment of the Board necessary or desirable for the administration of the Plan. The Board may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Option agreement in the manner and to the extent it shall deem expedient to implement the Plan, and the Board shall be the sole and final judge of such expediency. No director shall be liable for any action or determination made in good faith. The Board, in its discretion, may delegate its powers, duties and responsibilities to a committee, consisting of two or more members of the Board, all of whom shall be "disinterested persons" (as hereinafter defined). If a committee is so appointed, all references to the Board shall mean and relate to such committee, unless the context otherwise requires. For the purposes of the Plan, a director or member of this committee shall be deemed to be "disinterested" only if such person qualified as a "disinterested person" within the meaning of paragraph (c) (2) of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such term is interpreted from time to time. 4. Type of Options. Options granted pursuant to the Plan shall be authorized by action of the Board, and will be non-qualified options which do not meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). 5. Eligibility. Options may be granted to (i) directors, officers and key employees of the Company or any of its subsidiaries, or (ii) agents, directors of and consultants or advisors to the Company or any of its subsidiaries, whether or not otherwise employees of the Company or its subsidiaries. In determining the eligibility of an individual to be granted an Option, as well as in determining the number of shares to be optioned to any individual, the Board shall take into account the position and responsibilities of the individual being considered, the nature and value to the Company or its subsidiaries of his or her service and accomplishments, his or her present and potential contribution to the success of the Company or its subsidiaries, and such other factors as the Board may deem relevant. 6. Restrictions on Options. The Board may implement such restrictions on Options and the Common Stock underlying such as it deems reasonable and necessary under the circumstances then prevailing. 7. Option Agreement. Each Option shall be evidenced by an Option agreement ("Option Agreement") duly executed on behalf of the Company and by the optionee to whom such Option is granted, which Option Agreement shall comply with and be subject to the terms and conditions of the Plan. The Option Agreement may contain such other terms, provisions and conditions which are not inconsistent with the Plan as may be determined by the Board. No Option shall be granted within the meaning of the Plan and no purported grant of any Option shall be effective until the Option Agreement shall have been duly executed on behalf of the Company and the optionee. More than one Option may be granted to an individual. 8. Option Price. (a) The Option price or price of shares of Common Stock shall be as determined by the Board. (b) The Option price or prices for shares of Common Stock shall be at least the fair market value of the Common Stock at the time the Option is granted as determined by the Board in accordance with the Regulations promulgated under Section 422 of the Code. (c) If such shares are then listed on any national securities exchange, the fair market value shall be the mean between the high and low sales prices, if any, on the largest such exchange on the date of the grant of the Option or, if none, shall be determined by taking a weighted average of the means between the highest and lowest sales price on the nearest date before and the nearest date after the date of grant in accordance with Section 25.2512-2 of the Regulations. If the shares are not then listed on any such exchange, the fair market value of such shares shall be the mean between the closing "Bid" and the closing "Ask" prices, if any, as reported on the National Association of Securities Dealer Automated Quotation System ("NASDAQ") on the date of the grant of the Option, or, if none, shall be determined by the Board after weighing the various criteria then thought relevant for the purpose of providing a fair value therefor. 9. Manner of Payment; Manner of Exercise. (a) Options granted under the Plan may provide for the payment of the exercise price by delivery of (i) cash or a check payable to the order of the Company in an amount equal to the exercise price of such Options, (ii) shares of Common Stock owned by the optionee having a fair market value equal in amount to the exercise price of the Options being exercised, (iii) services invoiced to the Company or any of its subsidiaries or (iv) any combination of (i), (ii) and (iii); provided; however, that payment of the exercise price by delivery of shares of Common Stock owned by such optionee may be made only upon the condition that such payment does not result in a charge to earnings for financial accounting purposes as determined by the Board, unless such condition is waived by the Board. The fair market value of any shares of Common Stock which may be delivered upon exercise of an Option shall be determined by the Board in accordance with Section 8 hereof. (b) To the extent that the right to purchase shares under an Option has accrued and is in effect, Options may be exercised in full at one time or in part from time to time by giving written notice, signed by the person or persons exercising the Option, to the Company and stating the number of shares with respect to which the Option is being exercised, accompanied by payment in full for such shares as provided in subparagraph (a) above. Upon such exercise, delivery of a certificate for paid-up non-assessable shares shall be made at the principal office of the Company to the person or persons exercising the Option at such time, during ordinary business hours, after five (5) but not more than ten (10) days from the date of receipt of the notice by the Company, as shall be designated in such notice, or at such time, place and manner as may be agreed upon by the Company and the person or person exercising the Option. 10. Exercise of Options. Each Option granted under the Plan shall, subject to Section 11(b) and Section 13 hereof, be exercisable at such time or times and during such period as shall be set forth in the Agreement; provided, however, that no Option granted under the Plan shall have a term in excess of ten (10) years form the date of grant. To the extent that an Option to purchase shares is not exercised by an optionee when it becomes initially exercisable, it shall not expire but shall be carried forward and shall be exercisable, on a cumulative basis, until the expiration of the exercise period. 11. Term of Options; Exercisability. (a) Term. (i) Each Option shall expire on a date determined by the Board which is not more than ten (10) years from the date of the granting thereof; provided, however, except as otherwise provided in this Section 11, an Option granted to any optionee whose employment with the Company or any of its subsidiaries is terminated shall terminate on the earlier of (1) ninety days after the date such optionee's employment by the Company or by any such subsidiary is terminated, or (2) the date on which the Option expires by its terms. (ii) If the employment of an optionee is terminated by the Company or any of its subsidiaries for cause or because the optionee is in breach of any employment agreement, such Option will terminate on the date the optionee's employment is terminated by the Company or any such subsidiary. (iii) If the employment of an optionee is terminated by the Company or any of its subsidiaries because the optionee has become permanently disabled (within the meaning of Section 22(e)(3) of the Code), such Option shall terminate on the earlier of (1) one year after the date such optionee's employment by the Company or by any such subsidiary is terminated, or (2) the date on which the Option expires by its terms. (iv) In the event of the death of any optionee, any Option granted to such optionee shall terminate one year after the date of death, or on the date on which the Option expires by its terms, whichever occurs first. (b) Exercisability. (i) Except as provided below, an Option granted to an optionee whose employment with the Company or by any of its subsidiaries is terminated shall be exercisable only to the extent that the right to purchase shares under such Option has accrued and is in effect on the date such optionee's employment with the Company or by any such subsidiary is terminated. (ii) An Option granted to an optionee whose employment is terminated by the Company or by any of its subsidiaries because he or she has become permanently disabled, as defined above, shall be immediately exercisable as to the full number of shares covered by such Option, whether or not under the provisions of Section 10 hereof such Option was otherwise exercisable as of the date of disability. (iii) In the event of the death of an optionee, the Option granted to such optionee may be exercised as to the full number of shares covered thereby, whether or not under the provisions of Section 10 hereof the optionee was entitled to do so at the date of his or her death, by the executor, administrator or personal representative of such optionee, or by any person or persons who acquired the right to exercise such Option by bequest or inheritance or by reason of the death of such optionee. 12. Options Not Transferable. The right of any optionee to exercise any Option granted to him or her shall not be assignable or transferrable by such optionee other than by will or the laws of descent and distribution, and any such Option shall be exercisable during the lifetime of such optionee only by him or her. Any Option granted under the Plan shall be null and void and without effect upon the bankruptcy of the optionee to whom the Option is granted, or upon any attempted assignment or transfer, except as herein provided, including without limitation, any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition, attachment, trustee process or similar process, whether legal or equitable, upon such Option. 13. Recapitalization, Reorganizations and the Like. In the event that the outstanding shares of Common Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, or dividends payable in capital stock, appropriate adjustment shall be made in the number and kind of shares as to which Options may be granted under the Plan and as to which outstanding Options or portions thereof then unexercised shall be exercisable, to the end that the proportionate interest of the optionee shall be maintained as before the occurrence of such event; such adjustment in outstanding Options shall be made without change in the total price applicable to the unexercised portion of such Options and with a corresponding adjustment in the Option price per share. In addition, unless otherwise determined by the Board in its sole discretion, in the case of any (i) sale or conveyance to another entity of all or substantially all of the property and assets of the Company or (ii) Change in Control (as hereinafter defined) of the Company, the purchaser(s) of the Company's assets or stock, in his, her or its sole discretion, may deliver to the optionee the same kind of consideration that is delivered to the shareholders of the Company as a result of such sale, conveyance or Change in Control, or the Board may cancel all outstanding Options in exchange for consideration in cash or in kind, which consideration in both cases shall be equal in value to the value of those shares of stock or other securities the optionee would have received had the Option been exercised (but only to the extent then exercisable) and had no disposition of the shares acquired upon such exercise been made prior to such sale, conveyance or Change in Control, less the Option price therefor. Upon receipt of such consideration, all Options (whether or not then exercisable) shall immediately terminate and be of no further force or effect. The value of the stock or other securities the optionee would have received if the Option had been exercised shall be determined in good faith by the Board, and in the case of shares of Common Stock, in accordance with the provisions of Section 8 hereof. The Board shall also has the power and right to accelerate the exercisability of any Options, notwithstanding any limitations in this Plan or in the Agreement upon such a sale, conveyance or Change in Control. A "Change in Control" shall be deemed to have occurred if any person, or any two or more persons acting as a group, and all affiliates of such person or persons, who prior to such time owned less than fifty percent (50%) of the then outstanding Common Stock, shall acquire such additional shares of Common Stock in one or more transactions, or series of transactions, such that following such transaction or transactions, such person or group and affiliates beneficially own fifty percent (50%) or more of the Common Stock outstanding. Upon dissolution or liquidation of the Company, all Options granted under this Plan shall terminate, but each optionee (if at such time in the employ of or otherwise associated with the Company or any of its subsidiaries as a director, agent or consultant) shall have the right, immediately prior to such dissolution or liquidation, to exercise his or her Option to the extent then exercisable. If by reason of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board shall authorize the issuance or assumption of a stock option or stock options in a transaction to which Section 424(a) of the Code applies, then, notwithstanding any other provision of the Plan, the Board may grant an option or options upon such terms and conditions as it may deem appropriate for the purpose of assuming the old Option, or substituting a new option for the old Option, in conformity with the provisions of such Section 424(a) of the Code and the Regulations thereunder, and any such option shall not reduce the number of shares otherwise available for issuance under the Plan. No fraction of a share shall be purchasable or deliverable upon the exercise of any Option, but in the event any adjustment hereunder in the number of shares covered by the Option shall cause such number to include a fraction of a share, such fraction shall be adjusted to the nearest smaller whole number of shares. 14. No Special Employment Rights. Nothing contained in the Plan or in any Option granted under the Plan shall confer upon any Option holder any right with respect to the continuation of his or her employment by the Company or by any subsidiary or interfere in any way with the right of the Company or any subsidiary, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of the Option holder from the rate in existence at the time of the grant of an Option. Whether an authorized leave of absence, or absence in military or government service, shall constitute termination of employment shall be determined by the Board at the time of such occurrence. 15. Withholding. The Company's obligation to deliver shares upon the exercise of an Option shall be subject to the Option holder's satisfaction of all applicable Federal, state and local income and employment tax withholding requirements. The Company and optionee may agree to withhold shares of Common Stock purchased upon exercise of an Option to satisfy the above-mentioned withholding requirements; provided, however, no such agreement may be made by an optionee who is an "officer" or "director" within the meaning of Section 16 of the Exchange Act, except pursuant to a standing election to so withhold shares of Common Stock purchased upon exercise of an Option, such election to be made not less than six months prior to such exercise and which election may be revoked only upon six months prior written notice. 16. Restrictions on Issuance of Shares. (a) Notwithstanding the provisions of Section 9, the Company may delay the issuance of shares covered by the exercise of an Option and the delivery of a certificate for such shares until one of the following conditions shall be satisfied: (i) The shares with respect to which such Option has been exercised are at the time of the issue of such shares effectively registered or qualified under applicable Federal and state securities acts now in force or as hereafter amended; or (ii) Counsel for the Company shall have given an opinion, which opinion shall not be unreasonably conditioned or withheld, that such shares are exempt from registration and qualification under applicable Federal and state securities acts now in force or as hereafter amended. (b) It is intended that all exercises of Options shall be effective, and the Company shall use its best efforts to bring about compliance with the above conditions within a reasonable time, except that the Company shall be under no obligation to qualify shares or to cause a registration statement or a post-effective amendment to any registration statement to be prepared for the purpose of covering the issue of shares in respect of which any Option may be exercised, except as otherwise agreed to by the Company in writing in its sole discretion. 17. Purchase for Investment; Rights of Holder on Subsequent Registration. Unless and until the shares to be issued upon exercise of an Option granted under the Plan have been effectively registered under the 1933 Act, as now in force or hereafter amended, the Company shall be under no obligation to issue any shares covered by any Option unless the person who exercises such Option, in whole or in part, shall give a written representation and undertaking to the Company which is satisfactory in form and scope to counsel for the Company and upon which, in the opinion of such counsel, the Company may reasonably rely, that he or she is acquiring the shares issued pursuant to such exercise of the Option for his or her own account as an investment and not with a view to, or for sale in connection with, the distribution of any such shares, and that he or she will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the 1933 Act, or any other applicable law, and that if shares are issued without such registration, a legend to this effect may be endorsed upon the securities so issued. In the event that the Company shall, nevertheless, deem it necessary or desirable to register under the 1933 Act or other applicable statutes any shares with respect to which an Option shall have been exercised, or to qualify any such shares for exemption from the 1933 Act or other applicable statues, then the Company may take such action and may require from each Optionee such information in writing for use in any registration statement, supplementary registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for such purpose and may require reasonable indemnity to the Company and its officers and directors from such holder against all losses, claims, damages and liabilities arising from such use of the information so furnished and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. 18. Loans. At the discretion of the Board, the Company may loan to the optionee some or all of the purchase price of the shares acquired upon exercise of an Option. 19. Modification of Outstanding Options. The Board may authorize the amendment of any outstanding Option with the consent of the optionee when and subject to such conditions as are deemed to be in the best interests of the Company and in accordance with the purposes of the Plan. 20. Approval of Stockholders. The Plan shall not require presentation to or the approval of the stockholders of the Company. 21. Termination and Amendment of Plan. Unless sooner terminated as herein provided, the Plan shall terminate ten (10) years from the date upon which the Plan was duly adopted by the Board of the Company. The Board may at any time terminate the Plan or make such modification or amendment thereof as it deems advisable. 22. Limitation of Rights in the Option Shares. An optionee shall not be deemed for any purpose to be a stockholder of the Company with respect to any of the Options except to the extent that the Option shall have been exercised with respect thereto, and in addition, a certificate shall have been issued theretofore and delivered to the optionee. 23. Notices. Any communication or notice required or permitted to be given under the Plan shall be in writing, and mailed by registered or certified mail or delivered by hand, if to the Company, to the attention of the President at the Company's principal place of business; and, if to an optionee, to his or her address as it appears on the records of the Company. EXHIBIT A TO CBQ, INC. 1999 STOCK OPTION PLAN (August 30, 1999) INCENTIVE STOCK OPTION AGREEMENT THIS AGREEMENT has been made this ______ day of ______________________, 19__, between ___________________________________ ("Employee"), and CBQ, Inc., a Colorado corporation ("Company"). 1. Grant of Option. The Company, pursuant to the provisions of the CBQ, Inc. 1999 Incentive Stock Option Plan ("Plan"), a copy of which was previously received by the Employee, hereby grants to the Employee, subject to the terms and conditions set forth or incorporated herein, an option to purchase from the Company all or any part of an aggregate of ______________ common shares, as such are now constituted, at the purchase price of $_____ per share. The provisions of the Plan governing the terms and conditions of the Option granted hereby are incorporated in full herein and made a part hereof by this reference. The Employee, by his or her signature below, agrees to be bound by the terms and conditions of the Plan. 2. Exercise. This Option shall be exercisable in whole or in part on or after __________________ and on or before ____________________; provided, however, that the cumulative number of common shares as to which this Option may be exercised (except in the event of death, retirement, or disability, as provided in paragraph 11(a) of the Plan) shall not exceed the following amounts: Cumulative Number of Shares Prior To Date (Not Inclusive of) This Option shall be exercisable by the delivery to and receipt by the Company of (i) a written notice of election to exercise, in the form set forth in Exhibit A hereto, specifying the number of Common Shares to be purchased; (ii) accompanied by payment of the full purchase price thereof in cash or certified check payable to the order of the Company, or by fully-paid and nonassessable common shares of the Company properly endorsed over to the Company, or by a combination thereof, and (iii) by return of this Agreement for endorsement of exercise by the Company. In the event fully-paid and nonassessable common shares are submitted as whole or partial payment for shares to be purchased hereunder, such common shares will be valued at their Fair Market Value (as defined in the Plan) on the date such shares received by the Company are applied to payment of the exercise price. 3. Transferability. This Option is not assignable or transferable by the Employee other than by the Employee's will or by the laws of descent and distribution, as provided in paragraph 12 of the Plan. The Option shall be exercisable only by the Employee during the Employee's lifetime. CBQ, INC. ATTEST: By: _____________________________ By: ______________________________ President Secretary Employee hereby acknowledges receipt of the copy of the Plan, and accepts this Option subject to each and every term and provision of the Plan. Employee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Compensation Committee of the Board of Directors administering the Plan on any questions arising under the Plan. Employee recognizes that if his or her employment with the Company or any subsidiary thereof shall be terminated for any reason whatsoever, all of Employee's rights hereunder shall thereupon terminate as provided in the Plan. Date: _____________________________ Employee: _________________________ Print Name: _______________________ Address: __________________________ Social Security No.: ______________ EXHIBIT A TO OPTION AGREEMENT (Suggested form of letter to be used for notification of election to exercise. Please do not use this page, but follow this form in a separately typed letter.) Date: Treasurer CBQ, Inc. 4851 Keller Springs, Ste. 228 Addison TX Dear Sir: In accordance with paragraph 8 of the Stock Option Agreement evidencing the Option granted to me on _____________ under the CBQ, Inc. 1999 Incentive Stock Option Plan, I hereby elect to exercise this Option to the extent of _____________ Common Shares. Enclosed are (i) Certificate(s) No.(s) ________________________ representing fully-paid common shares of CBQ, Inc. endorsed to the Company with signature guaranteed; (ii) and/or a certified check payable to the order of "CBQ, Inc." in the amount of $ ___________ as the balance of the purchase price of $ ________________ for the shares which I have elected to purchase; and (iii) the original Incentive Stock Option Agreement for endorsement by the Company as to exercise. I acknowledge that the common shares (if any) submitted as part payment of the exercise price due hereunder will be valued by the Company at their Fair Market Value (as defined in the Plan) on the date this exercise is effected by the Company. In the event I hereafter sell any common shares issued pursuant to this option within two years from the date of exercise or within five years after the date of grant of this Option, I agree to notify the Company promptly of the amount of taxable compensation realized by me by reason of such for federal income tax purposes. When the certificate for common shares which I have elected to purchase has been issued, please deliver it to me, along with my endorsed Incentive Stock Option Agreement in the event there remains an unexercised balance of shares under the Option, at the following address: _____________________________ _____________________________ Very Truly Yours, _____________________________ Signature of Employee _____________________________ Print Name EXHIBIT B TO OPTION AGREEMENT VESTING OPTION GRANT THIS AGREEMENT has been made this _________________ day of __________________, 19__, between ("Employee"), and CBQ, Inc., a Colorado corporation ("Company"). 1. Grant of Option. The Company, pursuant to the provisions of the CBQ, Inc., 1999 Stock Option Plan ("Plan"), a copy of which was previously received by Employee, hereby grants to Employee, subject to the terms and conditions set forth or incorporated herein, an option to acquire ______________ common shares. The provisions of the Plan governing the terms and conditions of the Stock granted hereby are incorporated in full herein and made a part hereof by this reference. 2. Vesting. This Option shall be issuable as follows: Cumulative Number of Shares Issuance Date 3. Transferability. This Option grant is not assignable or transferable by Employee other than by Employee's will or by the laws of descent and distribution, as provided in paragraph 12 of the Plan. The shares shall be issuable only to the Employee during the Employee's lifetime. CBQ, INC. ATTEST: By: ____________________________ By: _____________________________ President Secretary Employee hereby acknowledges receipt of the copy of the Plan, and accepts this grant subject to each and every term and provision of the Plan. Employee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Compensation Committee of the Board of Directors administering the Plan on any questions arising under the Plan. Employee recognizes that if Employee's employment with the Company or any subsidiary thereof shall be terminated for any reason whatsoever (except as otherwise provided in paragraph 11(a) of the Plan), all of the Employee's rights hereunder shall thereupon terminate as provided in the Plan. Date: _____________________________ Employee: _________________________ Print Name: _______________________ Address: __________________________ Social Security No.: ______________ EX-10.2 4 EXHIBIT 10.2 EXHIBIT 10.2 Employment Agreement with John C. Harris EMPLOYMENT AGREEMENT This Employment Agreement ("Agreement") is made and entered into as of October 1, 1999, by and between CBQ, Inc., a Colorado corporation (the "Company"), and John C. Harris (the "Employee"). The parties agree as follows: 1. Engagement and Term of Employment. The Company employs Employee and Employee accepts employment for an initial term of six (6) months beginning the date first set forth above, unless sooner terminated as provided subsequently in this Agreement. This Agreement will be extended for additional six (6) month terms unless either the Company or the Employee elect to terminate this Agreement by giving 30 day's written notice prior to lapse of the initial or any subsequent six (6) month term. 2. Title, Responsibility and Location. Employee shall serve as Chief Executive Officer and Chairman of the Board of Directors of the Company ("Board") and of certain of its subsidiaries, those being, at present, CBQ, Inc., a Texas corporation, Priority One Electronics Corporation, a Pennsylvania corporation, JAB Consulting, and Cyberquest, Inc., Texas and Colorado corporations, and shall report directly to the Board. Subject to applicable law and the overall policy directives of the Board, the Employee shall have complete autonomy with respect to the day-to-day management of the business and affairs of the Company and shall have all executive powers and authority which are necessary to enable him to discharge his duties as an officer of the Company. 3. Compensation and Benefits. The Company shall pay and/or provide the following compensation and benefits to the Employee during the term hereof, and the Employee shall accept the same as payment in full for all services rendered by the Employee to or for the benefit of the Company: 3.1 Base Salary. A salary of $85,000 per annum during the initial term, and any subsequent six (6) month extension, of this Agreement shall be paid to the Employee by or on behalf of the Company (the "Base Salary"). The Base Salary shall be subject to review from time to time (not less frequently than at the end of each fiscal year of the Company) and, as a result, may be decreased or increased at the discretion of the Board in agreement with the Employee. The Base Salary shall accrue in equal monthly installments in arrears and shall be payable in accordance with the payroll practices of the Company in effect from time to time. 3.2 Bonus. In addition to the Base Salary, the Company shall pay to Employee a bonus in accordance with the sole and unconditioned discretion of the Board. 3.3 Stock Option and Stock Award Plan. The Employee shall be entitled to participate in the 1999 Stock Option and Stock Award Plan of the Company dated August 30, 1999, attached hereto as Exhibit A (the "Stock Option and Stock Award Plan"). The Employee shall receive, effective on execution of this Agreement, an option to acquire 25,000 shares of the Company's common stock. This option shall be automatically exercised by the Employee effective January 1, 2000, in lieu of a bonus under Section 3.2 of this Agreement for the year ended December 31, 1999. The option price shall be $2.125 per share, the market price for the common stock on the date of this Agreement. The price shall be paid through the delivery of services by the Employee to the Company for the period beginning October 1, 1999, and ending December 31, 1999. This option shall best on the Employee completing the initial three (3) month term of this Agreement without being terminated for cause, as set forth below. The Employee shall also receive, effective on execution of this Agreement, an option to acquire 500,000 shares of the Company's common stock during a five year period beginning April 1, 2000, and ending March 31, 2005, at a price of $2.125 per share, that being the "market price" for such stock on the effective date of this Agreement. This option shall vest on the Employee completing the initial six (6) month term of this Agreement without being terminated for cause, as set forth below. The shares to be issued under these two options shall be registered with the Securities and Exchange Commission under the Stock Option and Award Plan. 3.4 Other Benefit Plans. In addition to the Stock Option and Stock Award Plan, the Employee shall be entitled to participate in all of the Company's incentive and benefit plans and arrangements, including, without limitation, all such plans or arrangements made available in the future by the Company to its senior executives, subject to and an a basis consistent with the terms, conditions and overall administration of such plans and arrangements, but on a basis no less favorable than that afforded to any other director, officer or employee of the Company. 3.5 Life and Disability Insurance. The Company shall provide to Employee such life and disability insurance as may be subsequently negotiated and agreed between the Company and the Employee. 3.6 Health Insurance and Medical Reimbursement Plan. The Company shall provide to Employee at the Company's expense complete health insurance (including, without limitation, medical, dental, hospital and optical) for Employee and Employee's spouse and dependents. The Company shall also provide to Employee at the Company's expense a medical reimbursement plan for Employee and Employee's spouse and dependents covering all medical, dental, hospital, optical and other costs not covered by the aforementioned health insurance. 3.7 Vacation. Employee shall be entitled to the number of paid vacation days in each calendar year determined by the Board from time to time for the Company's senior executive officers, but not less than fifteen (15) business days in any calendar year. Employee shall also be entitled to all paid holidays given to the Company's senior executive officers. 3.8 Automobile. During the term hereof the Company shall give Employee an allowance of $500 per month for the purpose of purchasing or leasing an automobile and the Company shall reimburse Employee for all charges incurred by him in connection with the use thereof, including, without limitation, insurance premiums and the costs of gasoline, oil and maintenance. 3.9 Reimbursement of Expenses. The Company shall reimburse Employee for all expenses (including, without limitation, travel, meals, lodging and entertainment) incurred by Employee in connection with his performance of his duties hereunder. All such reimbursements shall be made by the Company immediately following presentation by Employee to the Company of appropriate documentation evidencing such expenses. 3.10 Withholding and Other Deductions. All compensation payable to Employee hereunder shall be subject to such deductions as the Company is from time to time required to make pursuant to all applicable laws, rules, regulations and orders of any federal, state or local governmental authority. 4. Representations and Warranties. Employee represents and warrants to the Company that he is under no contractual or other restriction or obligation which is inconsistent with his execution, delivery and performance of this Agreement. The Company represents and warrants to Employee that the execution, delivery and performance of this Agreement by the Company have been duly authorized by the Board and no further corporate action on the part of the Company is necessary and that this Agreement constitutes the valid and binding obligation of the Company, enforceable by Employee against the company strictly in accordance with its terms (subject to laws in affect with respect to creditors, rights generally and applicable principles relating to equitable remedies). 5. Insurance and Indemnification. Employee shall be entitled to the following additional benefits: 5.1 "Key-Man" Insurance. The Company shall have the right to purchase "key-man" life insurance covering employee, in the name and for the benefit of the Company and at the Company's expense, in any amount then obtainable. The Employee shall cooperate in all reasonable respects with the Company's efforts to obtain such insurance and shall submit to any required medical or other examination; provided; however, that if such medical or other examination cannot be conducted by the Employee's personal physician, then the Employee shall have the right to have his personal physician attend the examination. 5.2 Insurance Covering Employee. The Company shall at the Company's expense provide insurance coverage to Employee to the same extent as other senior executives and directors of the Company with respect to (i) director's and officer's liability, (ii) errors and omissions and (iii) general liability. 5.3 Indemnification. The Company shall indemnify the Employee and hold him harmless from and against any and all costs, expenses, losses, claims, damages, obligations and liabilities (including, without limitation, actual attorneys fees) arising out of or relating to any acts or omissions to act by Employee on behalf of or in the course of performing services for the Company and its subsidiaries, to the full extent permitted by any charter documents or bylaws of the Company or its subsidiaries as in effect on the date of this Agreement, or, if greater, as permitted by applicable law, provided that the indemnity afforded by any charter documents or bylaws of the Company or its subsidiaries shall never be greater than that permitted by applicable law. To the extent a change in applicable law permits greater indemnification than is now afforded by any charter documents or bylaws of the Company or its subsidiaries and a corresponding amendment shall not be made in said charter documents or bylaws, it is the intent of the parties hereto that the Employee shall enjoy the greater benefits so afforded by such change. If any claim, action, suit or proceeding is brought, or claim relating thereto is made, against the Employee with respect to which indemnity may be sought against the Company pursuant to the foregoing the Employee shall notify the Company in writing, and the Company shall have the right to participate in, and to the extent that it shall desire, in its discretion, assume and control the defense thereof, with counsel satisfactory to the Employee. 5.4 Rights Not Exclusive. The foregoing rights conferred on the Employee shall not be exclusive of any other right which the Employee may have or hereafter acquire under any statute, provision of the Articles of Incorporation or Bylaws, agreement, vote of shareholders or disinterested directors or otherwise, and such provisions shall survive the termination or expiration of this Agreement for any reason whatsoever. 6. Termination. This Agreement may be terminated as follows: 6.1 Death or Total Disability of Employee. If the Employee dies, the Employee's employment shall automatically terminate. If the Employee becomes "totally disabled" during the term hereof, this Agreement may be terminated at the option of the Company. For purposes of this Agreement, the Employee shall be deemed "totally disabled" if the Employee becomes physically or mentally incapacitated or disabled or otherwise unable to discharge the Employee's duties for a period of one hundred twenty (120) consecutive calendar days or for one hundred fifty (150) calendar days (whether or not consecutive) in any one hundred eighty (180) calendar day period. Prior to termination of this Agreement as a result of disability, and notwithstanding any failure or inability of Employee to render services hereunder, the Company shall continue to pay and/or provide to the Employee all of the compensation and benefits provided for in this Agreement. 6.2 Termination by the Company for Just Cause. (a) The Company may terminate the employment of the Employee for "Just Cause" on written notice by the Company to the Employee to such affect. For purposes of this Agreement, "Just Cause" means a determination by the Board in the exercise of its reasonable judgment that any of the following has occurred: (i) the willful and continued failure by the Employee to perform his duties and responsibilities for the Company and its subsidiaries under this Agreement (other than any such failure resulting from his incapacity due to physical or mental illness or disability); (ii) the engaging by the Employee in any act which is intended to be, and is, materially injurious to the Company, financially or otherwise; (iii) the conviction of the Employee of a criminal offense involving fraud, dishonesty or other moral turpitude; or (iv) the engaging by the Employee in any intentional act of dishonesty resulting or intending to result, directly or indirectly, in personal gain to Employee at the Company's expense. (b) On termination of the Employee's employment for Just Cause, the Employee shall not be entitled to any severance, termination or other compensation payment other than compensation and other benefits to which the Employee is entitled to the date of termination of employment. 6.3 Termination Without Just Cause for Good Reason. (a) The Company may terminate the employment of the Employee at any time without Just Cause on written notice by the Company to Employee. In addition, the Employee may terminate his employment for "Good Reason" on written notice by the Employee to the Company to such effect. For purposes of this Agreement, "Good Reason" shall mean (i) a substantial adverse alteration in the nature or status of the Employee's responsibilities with the Company; (ii) any transfer of 25% or more of the voting stock of the Company, any merger or consolidation of the Company into or with another entity or any sale of all or substantially all of the assets of the Company; or (iii) any purported termination of the Employee's employment which is not affected in accordance with this Agreement (which purported termination shall not be effective). Employee's right to terminate his employment for Good Reason shall not be affected by his incapacity due to physical or mental illness or disability. Employee's continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. (b) On termination of the Employee's employment without Just Cause or for Good Reason, the Company shall have the following obligations: (i) if not theretofore paid, the Company shall pay to or to the order of Employee within ten (10) days after the date of termination of Employee's employment an amount equal to the product of $42,500 times a fraction, the numerator of which is equal to the number of months remaining in the term hereof beginning from the date the Employee receives written notice from the Company or gives written notice to the Company, as the case may be, and counting any fraction of a month as a whole month, and the denominator of which is six; (ii) the Company shall pay to the Employee all outstanding and accrued vacation pay and other benefits to the date of termination; and (iii) all outstanding options which are not then vested shall immediately vest and become exerciseable. 6.4 No Mitigation. The Employee shall have no duty or obligation to mitigate damages, and if the Employee does choose to accept employment elsewhere after any breach or improper termination of this Agreement by the Company, then any income and other employment benefits received by the Employee by virtue of his employment by, or rendition of services for or on behalf of, any individual or entity other than the Company after such breach or improper termination shall not reduce the Company's obligation to make payments and afford benefits hereunder. 6.5 No Offset. The Company shall have no right to offset against any payments or other benefits due to the Employee under this Agreement the amount of any claims it may have against Employee by reason of any breach or alleged breach of this Agreement by the Employee; provided, however, that the Company shall have the right to offset any amounts due the Company from Employee pursuant to any judgment (after exhaustion of all appeals) rendered by a court of competent jurisdiction in connection with any breach or alleged breach of this Agreement by the Employee. 7. SEC Filings. The Company or its counsel engaged to advise the Company with respect to filings with the United States Securities and Exchange Commission (the "SEC") shall give timely notice and advice to the Employee to the extent the Company has or is given information that should indicate to the Company or its counsel of any requirement that the Employee make filings with the SEC. 8. General Relationship. The Employee shall be considered an employee of the Company within the meaning of all federal, state and local laws, rules and regulations including, without limitation, laws, rules and regulations governing unemployment insurance, workers' compensation, industrial accident, labor and taxes. 9. Miscellaneous: 9.1 Entire Agreement. This Agreement (including Exhibit A, which is incorporated by this reference) sets forth the entire understanding of the parties with respect to the subject matter of this Agreement, supersedes all existing agreements between them concerning that subject matter, and may be modified only by a written instrument duly executed by each party. 9.2 No Assignment. This Agreement may not be assigned by any party without the prior written consent of the other party (which consent may be granted or withheld by such other party in the exercise of his or its sole and absolute discretion) , and any attempt to assign rights and duties without such written consent shall be null and void and of no force and effect. Subject to the preceding sentence, this Agreement shall inure to the benefit of and be binding on the parties and their respective permitted successors and assigns. 9.3 Survival. The covenants, agreements, representations and warranties contained in or made pursuant to this Agreement shall survive the termination of this Agreement for any reason or no reason whatsoever for a period of three (3) years. 9.4 Party Beneficiaries. This Agreement does not create, and shall not be construed as creating, any rights enforceable by any individual or entity not a party to this Agreement. 9.5 Waiver. The failure of a party at any time to enforce performance by the other party of any provision of this Agreement shall in no way affect that party's rights to subsequently enforce the same or any other provision, nor shall the waiver by any party of any breach of any provision of this Agreement be deemed to be a waiver by that party of any other breach of the same or any other provision of this Agreement. 9.6 Headings. Headings contained in this Agreement are inserted solely for the convenience of the parties and are not a part, and are not intended to govern, limit or aid in the construction, of any term or provision in this Agreement. 9.7 Notices. All notices and other communications required or permitted under this Agreement shall be in writing, served personally on, telecopier, sent by courier or other express private mail service, or mailed by certified, registered or express United States mail postage prepaid, and shall be deemed given upon receipt if delivered personally, telecopier, or sent by courier or other express private mail service, or if mailed when actually received as shown on the return receipt. Notices shall be addressed as set forth below or to such other address of which notice is so given. If to the Company, to: CBQ, Inc 4851 Keller Springs, Ste. 228 Addison TX 75001 With a copy to: William J. Flannery III 2095 E. Quail Run Rd. Rockwall TX 75087 If to Employee, to: John C. Harris P.O. Box 940547 Plano TX 75095 9.8 Severability. All provisions contained in this Agreement are severable, and in the event any one or more of them are held to be invalid by any court of competent jurisdiction, this Agreement shall be interpreted as if such invalid provision or provisions were not contained in this Agreement. 9.9 Applicable Law and Jurisdiction. This Agreement is made with reference to the laws of the State of Texas, is governed by and construed in accordance with those laws, and any action brought under or arising out of this Agreement must be brought in any competent court within the State of Texas, County of Dallas. 9.10 Attorneys' Fees. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of any alleged dispute, breach, default or misrepresentation in connection with this Agreement, the successful or prevailing party shall be entitled to recover from the other party all costs and expenses (including, without limitation, attorneys' fees) incurred by the successful or prevailing party in that action or proceeding, in addition to any other relief to which the successful or prevailing party may be entitled. 9.11 Gender. Where the context so requires, the use of the masculine gender shall include the feminine and/or neuter genders and the singular shall include the plural, and vice versa 9.12 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. The parties have caused this Agreement to be duly executed and delivered as of the date first set forth above. CBQ, Inc. By: /s/ Greg Allen - ------------------ Greg Allen, President /s/ John C. Harris - ------------------ John C. Harris EXHIBIT A TO EMPLOYMENT AGREEMENT See attached 1999 Incentive Stock Option Plan (the "ISOP") EX-10.3 5 EXHIBIT 10.3 EXHIBIT 10.3 Employment Agreement with Greg Allen EMPLOYMENT AGREEMENT This Employment Agreement ("Agreement") is made and entered into as of October 1, 1999, by and between CBQ, Inc., a Colorado corporation (the "Company"), and Greg Allen (the "Employee"). The parties agree as follows: 1. Engagement and Term of Employment. The Company employs Employee and Employee accepts employment for an initial term of six (6) months beginning the date first set forth above, unless sooner terminated as provided subsequently in this Agreement. This Agreement will be extended for additional six (6) month terms unless either the Company or the Employee elect to terminate this Agreement by giving 30 day's written notice prior to lapse of the initial or any subsequent six (6) month term. 2. Title, Responsibility and Location. Employee shall serve as President and a member of the Board of Directors of the Company ("Board") and of certain of its subsidiaries, those being, at present, Reliance Technologies, Inc. (for which he shall also serve as Chief Executive Officer), CBQ, Inc., a Texas corporation, Priority One Electronics Corporation, a Pennsylvania corporation, Tophernet, Inc., a Texas corporation, JAB Consulting, a Texas corporation, and Cyberquest, Inc., a Colorado corporation, and shall report directly to the Board. Subject to applicable law and the overall policy directives of the Board, the Employee shall have complete autonomy with respect to the day-to-day management of the business and affairs of the Company and shall have all executive powers and authority which are necessary to enable him to discharge his duties as an officer of the Company. 3. Compensation and Benefits. The Company shall pay and/or provide the following compensation and benefits to the Employee during the term hereof, and the Employee shall accept the same as payment in full for all services rendered by the Employee to or for the benefit of the Company: 3.1 Base Salary. A salary of $85,000 per annum during the initial term, and any subsequent six (6) month extension, of this Agreement shall be paid to the Employee by or on behalf of the Company (the "Base Salary"). The Base Salary shall be subject to review from time to time (not less frequently than at the end of each fiscal year of the Company) and, as a result, may be decreased or increased at the discretion of the Board in agreement with the Employee. The Base Salary shall accrue in equal monthly installments in arrears and shall be payable in accordance with the payroll practices of the Company in effect from time to time. 3.2 Bonus. In addition to the Base Salary, the Company shall pay to Employee a bonus in accordance with the sole and unconditioned discretion of the Board. 3.3 Stock Option and Stock Award Plan. The Employee shall be entitled to participate in the 1999 Stock Option and Stock Award Plan of the Company dated August 30, 1999, attached hereto as Exhibit A (the "Stock Option and Stock Award Plan"). The Employee shall receive, effective on execution and delivery of this Agreement, an option to acquire 25,000 shares of the Company's common stock. This option has vested on execution and delivery of this Agreement and shall be automatically exercised by the Employee effective January 1, 2000, in lieu of a bonus under Section 3.2 of this Agreement for the year ended December 31, 1999. The option price shall be $2.125 per share, the market price for the common stock on the date of this Agreement. The price shall be paid through the delivery of services by the Employee to the Company for the period beginning October 1, 1999, and ending December 31, 1999. The Employee shall also be deemed to have received on August 30, 1999, an option to acquire 200,000 shares of the Company's common stock during a five year period beginning August 30, 1999, and ending August 29, 2004, at a price of $2.125 per share, that being the "market price" for such stock on the date of grant. This option vested on August 30, 1999, and was acknowledged by consents of the board dated that date. The Employee shall also receive, effective on execution and delivery of this Agreement, an option to acquire 275,000 shares of common stock during a five year period beginning April 1, 2000, and ending March 31, 2005. This option shall vest on Employee completing the initial six (6) month term of this Agreement without being terminated for cause, as set forth below. The shares to be issued under these options shall be registered with the Securities and Exchange Commission under the Stock Option and Award Plan. 3.4 Other Benefit Plans. In addition to the Stock Option and Stock Award Plan, the Employee shall be entitled to participate in all of the Company's incentive and benefit plans and arrangements, including, without limitation, all such plans or arrangements made available in the future by the Company to its senior executives, subject to and an a basis consistent with the terms, conditions and overall administration of such plans and arrangements, but on a basis no less favorable than that afforded to any other director, officer or employee of the Company. 3.5 Life and Disability Insurance. The Company shall provide to Employee such life and disability insurance as may be subsequently negotiated and agreed between the Company and the Employee. 3.6 Health Insurance and Medical Reimbursement Plan. The Company shall provide to Employee at the Company's expense complete health insurance (including, without limitation, medical, dental, hospital and optical) for Employee and Employee's spouse and dependents. The Company shall also provide to Employee at the Company's expense a medical reimbursement plan for Employee and Employee's spouse and dependents covering all medical, dental, hospital, optical and other costs not covered by the aforementioned health insurance. 3.7 Vacation. Employee shall be entitled to the number of paid vacation days in each calendar year determined by the Board from time to time for the Company's senior executive officers, but not less than fifteen (15) business days in any calendar year. Employee shall also be entitled to all paid holidays given to the Company's senior executive officers. 3.8 Automobile. During the term hereof the Company shall give Employee an allowance of $500 per month for the purpose of purchasing or leasing an automobile and the Company shall reimburse Employee for all charges incurred by him in connection with the use thereof, including, without limitation, insurance premiums and the costs of gasoline, oil and maintenance. 3.9 Reimbursement of Expenses. The Company shall reimburse Employee for all expenses (including, without limitation, travel, meals, lodging and entertainment) incurred by Employee in connection with his performance of his duties hereunder. All such reimbursements shall be made by the Company immediately following presentation by Employee to the Company of appropriate documentation evidencing such expenses. 3.10 Withholding and Other Deductions. All compensation payable to Employee hereunder shall be subject to such deductions as the Company is from time to time required to make pursuant to all applicable laws, rules, regulations and orders of any federal, state or local governmental authority. 4. Representations and Warranties. Employee represents and warrants to the Company that he is under no contractual or other restriction or obligation which is inconsistent with his execution, delivery and performance of this Agreement. The Company represents and warrants to Employee that the execution, delivery and performance of this Agreement by the Company have been duly authorized by the Board and no further corporate action on the part of the Company is necessary and that this Agreement constitutes the valid and binding obligation of the Company, enforceable by Employee against the company strictly in accordance with its terms (subject to laws in affect with respect to creditors, rights generally and applicable principles relating to equitable remedies). 5. Insurance and Indemnification. Employee shall be entitled to the following additional benefits: 5.1 "Key-Man" Insurance. The Company shall have the right to purchase "key-man" life insurance covering employee, in the name and for the benefit of the Company and at the Company's expense, in any amount then obtainable. The Employee shall cooperate in all reasonable respects with the Company's efforts to obtain such insurance and shall submit to any required medical or other examination; provided; however, that if such medical or other examination cannot be conducted by the Employee's personal physician, then the Employee shall have the right to have his personal physician attend the examination. 5.2 Insurance Covering Employee. The Company shall at the Company's expense provide insurance coverage to Employee to the same extent as other senior executives and directors of the Company with respect to (i) director's and officer's liability, (ii) errors and omissions and (iii) general liability. 5.3 Indemnification. The Company shall indemnify the Employee and hold him harmless from and against any and all costs, expenses, losses, claims, damages, obligations and liabilities (including, without limitation, actual attorneys fees) arising out of or relating to any acts or omissions to act by Employee on behalf of or in the course of performing services for the Company and its subsidiaries, to the full extent permitted by any charter documents or bylaws of the Company or its subsidiaries as in effect on the date of this Agreement, or, if greater, as permitted by applicable law, provided that the indemnity afforded by any charter documents or bylaws of the Company or its subsidiaries shall never be greater than that permitted by applicable law. To the extent a change in applicable law permits greater indemnification than is now afforded by any charter documents or bylaws of the Company or its subsidiaries and a corresponding amendment shall not be made in said charter documents or bylaws, it is the intent of the parties hereto that the Employee shall enjoy the greater benefits so afforded by such change. If any claim, action, suit or proceeding is brought, or claim relating thereto is made, against the Employee with respect to which indemnity may be sought against the Company pursuant to the foregoing the Employee shall notify the Company in writing, and the Company shall have the right to participate in, and to the extent that it shall desire, in its discretion, assume and control the defense thereof, with counsel satisfactory to the Employee. 5.4 Rights Not Exclusive. The foregoing rights conferred on the Employee shall not be exclusive of any other right which the Employee may have or hereafter acquire under any statute, provision of the Articles of Incorporation or Bylaws, agreement, vote of shareholders or disinterested directors or otherwise, and such provisions shall survive the termination or expiration of this Agreement for any reason whatsoever. 6. Termination. This Agreement may be terminated as follows: 6.1 Death or Total Disability of Employee. If the Employee dies, the Employee's employment shall automatically terminate. If the Employee becomes "totally disabled" during the term hereof, this Agreement may be terminated at the option of the Company. For purposes of this Agreement, the Employee shall be deemed "totally disabled" if the Employee becomes physically or mentally incapacitated or disabled or otherwise unable to discharge the Employee's duties for a period of one hundred twenty (120) consecutive calendar days or for one hundred fifty (150) calendar days (whether or not consecutive) in any one hundred eighty (180) calendar day period. Prior to termination of this Agreement as a result of disability, and notwithstanding any failure or inability of Employee to render services hereunder, the Company shall continue to pay and/or provide to the Employee all of the compensation and benefits provided for in this Agreement. 6.2 Termination by the Company for Just Cause. (a) The Company may terminate the employment of the Employee for "Just Cause" on written notice by the Company to the Employee to such affect. For purposes of this Agreement, "Just Cause" means a determination by the Board in the exercise of its reasonable judgment that any of the following has occurred: (i) the willful and continued failure by the Employee to perform his duties and responsibilities for the Company and its subsidiaries under this Agreement (other than any such failure resulting from his incapacity due to physical or mental illness or disability); (ii) the engaging by the Employee in any act which is intended to be, and is, materially injurious to the Company, financially or otherwise; (iii) the conviction of the Employee of a criminal offense involving fraud, dishonesty or other moral turpitude; or (iv) the engaging by the Employee in any intentional act of dishonesty resulting or intending to result, directly or indirectly, in personal gain to Employee at the Company's expense. (b) On termination of the Employee's employment for Just Cause, the Employee shall not be entitled to any severance, termination or other compensation payment other than compensation and other benefits to which the Employee is entitled to the date of termination of employment. 6.3 Termination Without Just Cause for Good Reason. (a) The Company may terminate the employment of the Employee at any time without Just Cause on written notice by the Company to Employee. In addition, the Employee may terminate his employment for "Good Reason" on written notice by the Employee to the Company to such effect. For purposes of this Agreement, "Good Reason" shall mean (i) a substantial adverse alteration in the nature or status of the Employee's responsibilities with the Company; (ii) any transfer of 25% or more of the voting stock of the Company, any merger or consolidation of the Company into or with another entity or any sale of all or substantially all of the assets of the Company; or (iii) any purported termination of the Employee's employment which is not affected in accordance with this Agreement (which purported termination shall not be effective). Employee's right to terminate his employment for Good Reason shall not be affected by his incapacity due to physical or mental illness or disability. Employee's continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. (b) On termination of the Employee's employment without Just Cause or for Good Reason, the Company shall have the following obligations: (i) if not theretofore paid, the Company shall pay to or to the order of Employee within ten (10) days after the date of termination of Employee's employment an amount equal to the product of $42,500 times a fraction, the numerator of which is equal to the number of months remaining in the term hereof beginning from the date the Employee receives written notice from the Company or gives written notice to the Company, as the case may be, and counting any fraction of a month as a whole month, and the denominator of which is six; (ii) the Company shall pay to the Employee all outstanding and accrued vacation pay and other benefits to the date of termination; and (iii) all outstanding options which are not then vested shall immediately vest and become exerciseable. 6.4 No Mitigation. The Employee shall have no duty or obligation to mitigate damages, and if the Employee does choose to accept employment elsewhere after any breach or improper termination of this Agreement by the Company, then any income and other employment benefits received by the Employee by virtue of his employment by, or rendition of services for or on behalf of, any individual or entity other than the Company after such breach or improper termination shall not reduce the Company's obligation to make payments and afford benefits hereunder. 6.5 No Offset. The Company shall have no right to offset against any payments or other benefits due to the Employee under this Agreement the amount of any claims it may have against Employee by reason of any breach or alleged breach of this Agreement by the Employee; provided, however, that the Company shall have the right to offset any amounts due the Company from Employee pursuant to any judgment (after exhaustion of all appeals) rendered by a court of competent jurisdiction in connection with any breach or alleged breach of this Agreement by the Employee. 7. SEC Filings. The Company or its counsel engaged to advise the Company with respect to filings with the United States Securities and Exchange Commission (the "SEC") shall give timely notice and advice to the Employee to the extent the Company has or is given information that should indicate to the Company or its counsel of any requirement that the Employee make filings with the SEC. 8. General Relationship. The Employee shall be considered an employee of the Company within the meaning of all federal, state and local laws, rules and regulations including, without limitation, laws, rules and regulations governing unemployment insurance, workers' compensation, industrial accident, labor and taxes. 9. Miscellaneous: 9.1 Entire Agreement. This Agreement (including Exhibit A, which is incorporated by this reference) sets forth the entire understanding of the parties with respect to the subject matter of this Agreement, supersedes all existing agreements between them concerning that subject matter, and may be modified only by a written instrument duly executed by each party. 9.2 No Assignment. This Agreement may not be assigned by any party without the prior written consent of the other party (which consent may be granted or withheld by such other party in the exercise of his or its sole and absolute discretion) , and any attempt to assign rights and duties without such written consent shall be null and void and of no force and effect. Subject to the preceding sentence, this Agreement shall inure to the benefit of and be binding on the parties and their respective permitted successors and assigns. 9.3 Survival. The covenants, agreements, representations and warranties contained in or made pursuant to this Agreement shall survive the termination of this Agreement for any reason or no reason whatsoever for a period of three (3) years. 9.4 Party Beneficiaries. This Agreement does not create, and shall not be construed as creating, any rights enforceable by any individual or entity not a party to this Agreement. 9.5 Waiver. The failure of a party at any time to enforce performance by the other party of any provision of this Agreement shall in no way affect that party's rights to subsequently enforce the same or any other provision, nor shall the waiver by any party of any breach of any provision of this Agreement be deemed to be a waiver by that party of any other breach of the same or any other provision of this Agreement. 9.6 Headings. Headings contained in this Agreement are inserted solely for the convenience of the parties and are not a part, and are not intended to govern, limit or aid in the construction, of any term or provision in this Agreement. 9.7 Notices. All notices and other communications required or permitted under this Agreement shall be in writing, served personally on, telecopier, sent by courier or other express private mail service, or mailed by certified, registered or express United States mail postage prepaid, and shall be deemed given upon receipt if delivered personally, telecopier, or sent by courier or other express private mail service, or if mailed when actually received as shown on the return receipt. Notices shall be addressed as set forth below or to such other address of which notice is so given. If to the Company, to: CBQ, Inc 4851 Keller Springs, Ste. 228 Addison TX 75001 With a copy to: William J. Flannery III 2095 E. Quail Run Rd. Rockwall TX 75087 If to Employee, to: Greg Allen 4851 Keller Springs, Ste. 228 Addison TX 75001 9.8 Severability. All provisions contained in this Agreement are severable, and in the event any one or more of them are held to be invalid by any court of competent jurisdiction, this Agreement shall be interpreted as if such invalid provision or provisions were not contained in this Agreement. 9.9 Applicable Law and Jurisdiction. This Agreement is made with reference to the laws of the State of Texas, is governed by and construed in accordance with those laws, and any action brought under or arising out of this Agreement must be brought in any competent court within the State of Texas, County of Dallas. 9.10 Attorneys' Fees. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of any alleged dispute, breach, default or misrepresentation in connection with this Agreement, the successful or prevailing party shall be entitled to recover from the other party all costs and expenses (including, without limitation, attorneys' fees) incurred by the successful or prevailing party in that action or proceeding, in addition to any other relief to which the successful or prevailing party may be entitled. 9.11 Gender. Where the context so requires, the use of the masculine gender shall include the feminine and/or neuter genders and the singular shall include the plural, and vice versa 9.12 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. The parties have caused this Agreement to be duly executed and effective as of the date first set forth above. CBQ, Inc. By: /s/ John Harris - ------------------- John Harris, CEO /s/ Greg Allen - -------------- Greg Allen EXHIBIT A TO EMPLOYMENT AGREEMENT See attached 1999 Incentive Stock Option Plan (the "ISOP") EX-24 6 EXHIBIT 24 EXHIBIT 24 Consent to Use of Opinion January 10, 2000 REGULAR MAIL Board of Directors, CBQ, Inc. 4851 Keller Springs, Ste. 228 Addison TX 75248 Re: Consent to Reference in Form S-8 Registration Statement Gentlemen: As independent certified public accountants, we hereby consent to the incorporation by reference in the above Form S-8 Registration Statement of our report on the financial statements included in the CBQ, Inc., Annual Report on Form 10-KSB for the year ended December 31, 1998, and to all references to our firm included in said registration statement. HALLIBURTON, HUNTER & ASSOCIATES, PC Littleton, Colorado -----END PRIVACY-ENHANCED MESSAGE-----