ACQUISITION AGREEMENT
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THIS ACQUISITION AGREEMENT wherein the participants are QUIKBIZ
INTERNET GROUP, INC., a Nevada corporation ("QBIZ") f/k/a ALGORHYTHM
TECHNOLOGIES CORP. and QUIKLAB MULTIMEDIA CENTERS, INC., a Florida
corporation ("QLAB").
W I T N E S S E T H:
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WHEREAS, QBIZ a) is a Nevada corporation in good standing which is
currently a publicly traded SEC reporting company (f/k/a Algorhythm Technologies
Corp.), traded on the OTC bulletin board under the symbol, QBIZ (f/k/a ALGR);
and b) QBIZ is a holding company which includes or will include in this holdings
other corporate entities such as QLAB, and c) has 12,535,240 shares issued and
outstanding as of May 29, 1998; and
WHEREAS, QLAB a) is a Florida corporation in good standing and is in
the business of creating and providing multimedia products and services to
parties such as QBIZ; and b) has 500,000 authorized shares, of which 500,000
shares have been issued; and
WHEREAS, The Board of Directors of QBIZ and the Board of Directors of
QLAB deem it advisable that QBIZ acquire QLAB as a wholly owned subsidiary of
QBIZ with certain principals of QLAB continuing on to head up operations for
QLAB for a period of time, subject to employment agreements and other
conditions; and
WHEREAS, QLAB shall perform certain services for QBIZ; and
WHEREAS, QBIZ has furnished or will furnish QLAB, within thirty (30)
days of the execution of this Agreement, with a copy of its 10-K submission for
the year of 1997. It is understood that this Agreement shall not be binding upon
QLAB until said 10-K has been submitted for the year 1997. This submission, to
the extent required, (i) shall be in accordance with the books and records of
QBIZ (ii) do and shall fairly represent the financial condition of QBIZ as of
those dates and the results of its operations as of and for the periods
specified, all prepared in accordance with generally accepted accounting
principles; and (iii) do and shall contain and reflect, in accordance with
generally accepted accounting principals consistently applied, reserves for all
liabilities, losses and costs in excess of expected receipts and all discounts
and refunds for services and products already rendered or sold that are
reasonably
anticipated and based on events or circumstances in existence or likely to occur
in the future with respect to any of the contracts or commitments of QBIZ.
Specifically, but not by way of limitation, if customary, the submissions shall
disclose, in accordance with generally accepted accounting principles, all of
the debts, liabilities, and obligations of any nature (whether absolute,
accrued, contingent or otherwise, and whether due or to become due) of QBIZ at
the Balance Sheet Date, and shall include appropriate reserve for all taxes and
other liabilities accrued or due at that date but not yet payable; and
WHEREAS, QLAB has furnished or will furnish QBIZ with a copy of its
audited financial statements of QLAB for the years 1996 and 1997 and the related
statement of income for the first three months of 1998 within 60 days from date
of this agreement. These financial statements (i) are and shall be in accordance
with the books and records of QLAB; (ii) do and shall fairly represent the
financial condition of QLAB as of those dates and the results of its operations
as of and for the periods specified, all prepared in accordance with generally
accepted accounting principles; (iii) do and shall contain and reflect, in
accordance with generally accepted accounting principles consistently applied,
reserves for all liabilities losses and costs in excess of expected receipts and
all discounts and refunds for services and products already rendered or sold
that are reasonably anticipated and based on events or circumstances in
existence or likely to occur in the future with respect to any of the contracts
or commitments of QLAB, and shall be warranted as true and correct by the
hereinafter named principals of QLAB. Specifically, but not by way of
limitation, the Balance Sheet shall disclose, in accordance with generally
accepted accounting principals, all of the debts, liabilities, and obligations
of any nature (whether absolute, accrued, contingent or otherwise, and whether
due or to become due) of QLAB at the Balance Sheet Date, and shall include
appropriate reserves for all taxes and other liabilities accrued or due at that
date but not yet payable; and
WHEREAS, all required federal, state and local tax returns of QBIZ and
QLAB have been accurately prepared and filed, and all federal, state and local
taxes required to be paid with respect to the periods covered by the returns
have been paid including, but not limited to, income, employment, property,
franchise and sales tax. QBIZ and QLAB have not been delinquent in the payment
of any tax or assessment; and
WHEREAS, all named parties represent unto the other that they have
authority to enter in to this Agreement; and
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WHEREAS, neither corporate entity is a party to any pending or
threatened litigation and/or legal action; and
WHEREAS, neither party has consulted with a broker or a finder in
arranging the instant transaction.
NOW THEREFORE, based upon the statements made hereinabove and the
covenants and conditions set forth hereinbelow, the parties agree and
acknowledge as follows:
1. All of the above statements are true and correct.
2. The parties shall cause the following to simultaneously occur
with the execution of this Agreement:
(A) All of the stockholders of QLAB shall surrender their
shares to the Secretary of QLAB, resulting in there being
500,000 shares in the treasury of QLAB.
(B) Intentionally omitted
(C) QBIZ shall acquire all of the QLAB authorized shares
and QBIZ shall own 100% of the stock of QLAB.
(D) Upon signing of this Agreement, QBIZ will
adopt the employment agreement between QLAB,
and XXXXX XXXXXXXX ("BAWARSKY") as its own
employment agreement between the parties,
subject to all the terms and conditions
therein and will guarantee the terms
therein. Additionally, QBIZ will provide
BAWARSKY the following as additional
compensation:
(i) If, within a three year timetable
commencing the execution of said
employment agreement, QLAB doubles its
net revenue, QBIZ will issue a total of
2,800,000 options [on a one time basis]
of restricted common stock, at a price
of $.002 per share to BAWARSKY, these
options will be for a period of five
years;
(ii) BAWARSKY's option, a maximum of $50,000
of his gross annual compensation
under said employment agreement may be
taken in the form of equity of QBIZ on a
pro rata quarterly basis at
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the purchase rate equivalent to the bid
price of QBIZ at the end of said
quarter.
(iii) QBIZ will also issue a total of 200,000
options (on a one time basis) of common
S-8 stock, at $.002 per share to
BAWARSKY, within 5 working days from the
date of execution of this Agreement;
these options will be for a period of
two years; and
(iv) BAWARSKY shall serve as CEO and Chairman
of the Board of QBIZ for a minimum of 5
years.
(E) QLAB shall have its own Board of Directors, consisting of
two directors, with BAWARSKY being Chairman and CEO and
Xxxx Xxxxx as Director.
(F) QBIZ will cause QLAB, as a wholly owned subsidiary of
QBIZ, to enter into an employment agreement with three
(and perhaps fours, total) of its principals, to be named
by BAWARSKY, to receive an employment agreement with an
option package of 120,000 shares of QBIZ common stock, at
$.002 per share within 3 days from date of this agreement
and provide an additional option package of 80,000 shares
of QBIZ common stock, at $.002 per share, subject to each
said principal remaining continuously employed with QLAB
for a period of one year from the execution of this
agreement, with such employment agreement shall be
otherwise in form as approved by the attorney for QBIZ.
3. The parties recognize that all of the statements made
herein by each party are made as material inducements to the
other party to execute this Agreement and perform obligations
under this Agreement.
1. Pending consummation of all of the obligations under this
Agreement, QBIZ and QLAB will carry on their business in
substantially the same manner as before and each will use its
best efforts to maintain its business organization intact, to
retain its present employees, and to maintain its
relationships with suppliers and other business contacts.
Except with the prior consent in writing of QBIZ, pending
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consummation of the obligations under this Agreement, QLAB
shall not:
(A) Declare, pay and dividend or make any other
distribution on its shares.
(B) Create or issue any indebtedness for borrowed money.
(C) Enter into any transaction other than those involved
in carrying on its ordinary course of business.
5. Except as may be expressly waived in writing by QLAB, all of
the obligations of QLAB under this Agreement are subject to
the satisfaction, prior to or on the closing/completion of
obligations, of each of the following conditions by QBIZ:
(A) The representations and warranties made by QBIZ to
QLAB herein and in any document delivered pursuant to this
Agreement shall be deemed to have been made again at the
time of the exchange and shall then be true and correct in
all material respects. If QBIZ shall have discovered any
material error, misstatement or omission in those
representations and warranties on or before closing, it
shall report that discovery immediately to QLAB and shall
either correct the error, misstatement, or omission or
obtain a written waiver from QLAB. The parties agree to
resolve any dispute regarding material error, misstatement
or omission through arbitration following the Rules of the
American Arbitration Association. The results of such
arbitration shall be binding upon the parties.
(B) QBIZ shall have performed and complied with all agreements
and conditions required by this Agreement to be performed
and complied with by it prior to or at closing.
(C) No action or proceeding by any governmental body or agency
shall have been threatened, asserted, or instituted to
restrain or prohibit the carrying out of the transactions
contemplated by this Agreement.
(D) All corporate and other proceedings and action taken in
connection with the transactions contemplated by this
Agreement and all certificates, opinions, agreements,
instruments, and documents shall be satisfactory in form
and substance to counsel for QLAB.
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6. Except as may be expressly waived in writing by QBIZ, all of
the obligations of QBIZ under this Agreement are subject to
the satisfaction, prior to or on the closing/completion of
obligations, of each of the following conditions by QLAB:
(A) The representations and warranties made by QLAB to
QBIZ herein and in any document delivered pursuant to this
Agreement shall be deemed to have been made again at the
time of the exchange and shall then be true and correct in
all material respects. If QLAB shall have discovered any
material error, misstatement or omission in those
representations and warranties on or before closing, it
shall report that discovery immediately to QBIZ and shall
either correct the error, misstatement, or omission or
obtain a written waiver from QBIZ. The parties agree to
resolve any dispute regarding material error, misstatement
or omission through arbitration following the Rules of the
American Arbitration Association. The results of such
arbitration shall be binding upon the parties.
(B) QLAB shall have performed and complied with all agreements
and conditions required by this Agreement to be performed
and complied with by it prior to or at closing.
(C) No action or proceeding by any governmental body or agency
shall have been threatened, asserted, or instituted to
restrain or prohibit the carrying out of the transaction
contemplated by this Agreement.
(D) All corporate and other proceedings and action taken in
connection with the transactions contemplated by this
Agreement and all certificates, opinions, agreements,
instruments, and documents shall be satisfactory in form
and substance to counsel for QBIZ.
(E) QBIZ shall have received (and approved for its purposes in
completing the proposed acquisition) all documentation as
described in this agreement from QLAB. Notwithstanding
anything stated to the contrary herein, the parties
understand and acknowledge that a line of credit and
long-term debt for QLAB exists at the time of this
acquisition. It is the understanding and
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agreement of QLAB and QBIZ that the parties shall
terminate and close QLAB's lines of credit no later than
sixty (60) days after the closing of this transaction.
After the date of this transaction, all of the net profits
and dividends of QLAB shall be applied first to the
payment of the credit line and other long-term debt until
paid in full, as determined by QLAB. Further, subject to
QLAB generating sufficient profits to retire this debt,
QBIZ shall indemnify QLAB and be responsible to and for
all claims related to said credit line account and other
long-term debt after the date of this Agreement.
7. Intentionally omitted
8. The Bylaws of QBIZ, as existing on this date, shall continue
in full force as the Bylaws of QBIZ until altered amended or
repealed, as provided in the Bylaws or as provided by law.
Appropriate corporate documentation the form of minutes,
resolutions, et al, shall be executed memorializing and
authoring the actions provided for herein.
9. All statements contained in any memorandum, certificate,
letter, document, or other instrument delivered by or on
behalf of QLAB, QBIZ, or the stockholders identified in this
Agreement shall be deemed representations and warranties made
by the respective parties to each other under this Agreement.
The covenants, representations, and warranties of the parties
and the stockholders shall survive for a period of three years
after the effective date. No inspection, examination or audit
made on behalf of the parties or the stockholders shall act as
a waiver of any representation or warranty made under this
Agreement.
10. QLAB and QBIZ shall mutually indemnify and hold each other
harmless against and in respect of all damages. Damages, as
used in this paragraph, shall include any claim, action,
demand, loss, cost, expense, liability, penalty and other
damage, including without limitation, counsel fees and other
costs and expenses incurred in investigating, in attempting to
avoid damage or to oppose the imposition of damages, or in
enforcing this indemnity, resulting to QBIZ or QLAB, as the
case may be, from (i) any inaccurate representation made by or
on behalf of the other or its stockholder(s) in or pursuant to
this Agreement; (ii)
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breach of any of the warranties made by or on behalf of the
other or the stockholder(s), in or pursuant to this Agreement;
(iii) breach or default in the performance by the other of any
of the obligations to be performed by it under this Agreement;
or (iv) breach or default in the performance by the
stockholder(s) of any of the obligations to be performed by
them under any agreement delivered to them by the other
pursuant to this Agreement. The defaulting entity shall
reimburse the non-defaulting entity on demand for any payment
made or for any loss suffered by the non-defaulting entity at
any time after execution hereof, based on the arbitration
following the Rules of the American Arbitration Association or
pursuant to a bona fide compromise or settlement of claims,
demands, or actions, in respect of any damages specified by
the foregoing indemnity. The defaulting entity shall satisfy
its obligations to the other by the payment of cash on demand.
The defaulting entity shall have the opportunity to defend any
claim, action, or demand asserted against the other for which
the other claims indemnity provided that
(a) the defense is conducted by reputable
counsel approved by the non-defaulting
entity, which approval shall not be
unreasonably withheld;
(b) the defense is expressly assumed in writing
within ten days after written notice of the
claim, action or demand is given to the
stockholder(s); and
(c) counsel for the non-defaulting entity may
participate at all times and in all
proceedings (formal and informal) relating to
the defense, compromise, and settlement of
the claim, action, or demand, at the expense
of the other. By their signatures
hereinbelow, BAWARSKY guarantees the
obligations of QLAB set forth in this
paragraph 10.
11. This Agreement may be terminated and the actions contemplated
herein abandoned at any time within 7 days prior to the
closing of this transaction based upon the following:
(A) By mutual consent of the Board of Directors of both
corporate entities.
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(B) At the election of the Board of Directors of either
corporate entity if:
(1) Any litigation or proceeding shall be
instituted or threatened against the other
corporate entity or any of its assets, that,
in the correct opinion of such Board of
Directors, renders the instant transaction
inadvisable or undesirable.
(2) Any legislation shall be enacted that
materially renders the proposed transaction
inadvisable or undesirable.
(3) Between the date of this Agreement and the
completion of obligations provided for
herein there shall have been, in the opinion
of the Board of Directors of either
corporation, any materially adverse change
in the business or condition, financial or
otherwise, of the other corporate entity.
(4) Counsel for either corporation shall have
determined, prior to the completion of
obligations herein, that (a) the exchange of
stock provided for herein shall result in
the requirement of one or more of the
parties to this transaction to pay United
States federal income tax as a result of
ordinary or capital gain, or (b) the
proposed transaction is in violation of
federal, state and local law.
(C) At the election of the Board of Directors of QBIZ if
without the prior consent in writing of QBIZ, QLAB shall
have:
(1) Declared or paid a cash dividend on its
common stock or declared or paid any other
dividend or made any other distribution on
its shares.
(2) Created or issued any indebtedness for
borrowed money. (3) Entered into any
transaction other than those involved in
carrying on its business in the usual
manner.
(D) On or before June 30, 1998, QBIZ shall perform all due
diligence, and QLAB shall perform all obligations referred
to herein and required by each of them prior to closing.
Within 7 days of the date of closing, QBIZ shall advise
QLAB in writing at the address set forth herein of its
intention to terminate this Agreement. In the event QBIZ
does not terminate this
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Agreement on the date of closing, the stock which is the
subject of this transaction shall vest and the matter
shall be closed. However, the representations and
warranties made herein shall survive as indicated herein.
(E) The cost of all due diligence, investigations including
audits, etc., as ordered by QBIZ, shall be borne
exclusively by QBIZ.
12. Any notice or other communication required or permitted under
this Agreement shall be properly given when deposited with the
United States Postal Service for transmittal by certified or
registered mail, postage prepaid, or when deposited with a
public telegraph company for transmittal, charges prepaid,
addressed as follows:
(A) In the case of QBIZ, to: XXXX XXXXX ("XXXXX"),
President, QBIZ, 0000 XX 00xx Xxxxxx, Xxxxx 000, Xxxx
Xxxxxxxxxx, XX 00000, or to such other person or address
as QBIZ may from time to time request in writing.
(B) In the case of QLAB, to: XXXXX XXXXXXXX, President,
CEO, and Chairman of the Board, QLAB, 0000 Xxxx Xxxxxxx
Xxxx Xxxx., Xxxx Xxxxxxxxxx, XX 00000, or to such other
person or address as QLAB may from time to time request in
writing.
13. QBIZ has prepared this Agreement in accordance with
instructions received from XXXXX, as President of QBIZ. Xxxxxx
and Lander, P.A./Xxxx X. Xxxxxx, Esq. (collectively "Xxxxxx")
has reviewed this agreement in accordance with instructions
received from BAWARSKY as president of QLAB, and therefore,
for the purposes of resolving any ambiguities, if any, QBIZ
and its principal, XXXXX, shall be deemed to have participated
in the preparation of all terms and conditions in this
Agreement. The foregoing provisos shall also apply to any and
all agreements, documentation, consents, minutes, etc.
contemplated by and/or referred to in this Agreement.
14. The parties agree to resolve any dispute arising out of a
breach of any of the terms and/or conditions of this Agreement
through arbitration following the Rules of the American
Arbitration Association. The results of such arbitration shall
be binding upon the parties, and the prevailing party shall be
entitled to recover reasonable attorneys' fees and court
costs.
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15. This Agreement and the exhibits to this Agreement contain the
entire agreement between the parties with respect to the
contemplated transaction. This Agreement may be executed in
any number of counterparts, all of which taken together shall
be deemed one original.
16. The validity, interpretation and performance of this Agreement
shall be governed by, construed and enforced in accordance
with the laws of the State of Florida, and exclusive venue
shall be in Broward County, Florida.
IN WITNESS WHEREOF, this Agreement was executed on
the dates set forth after signatures hereinbelow.
QUIKBIZ INTERNET GROUP, INC. QUIKLAB MULTIMEDIA CENTERS, INC.
a Nevada corporation a Florida corporation
By: /s/Xxxxxx X. Xxxxx By: /s/Xxxxx Xxxxxxxx
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Xxxxxx X. Xxxxx, President Xxxxx Xxxxxxxx, President
Dated: June 25, 1998 Dated: June 25, 1998
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