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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
General Form for Registration of Securities of Small
Business Issuers Under Section 12(b) or 12(g) of
the Securities Act of 1934.
QORUS.COM, INC.
(Name of Small Business Issuer in its Charter)
FLORIDA 65-0358792
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
9800 SOUTH SEPULVEDA BOULEVARD, SUITE 318, LOS ANGELES, CALIFORNIA 90045
(Address of Principal Executive Offices) (Zip Code)
(310) 258-8450
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
NONE
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE
(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
A Note About Forward-Looking Statements
The statements, other than statements of historical fact, included in
this registration statement are forward-looking statements. Forward-looking
statements generally can be identified by the use of forward-looking
terminology such as "may," "will," "estimate," "anticipate," "believe," "plan,"
"expect," "intends" or "seek." We believe that the expectations reflected in
such forward-looking statements are accurate. However, we cannot assure you
that such expectations will occur. Our actual future performance could differ
materially from such statements. Factors that could cause or contribute to such
differences include, but are not limited to:
o adverse economic conditions;
o competition in the Internet telecommunications industries generally;
o the passage of legislation or court decisions adversely affecting the
Internet telecommunications industries;
o the advent of new technology; and
o our ability to develop and maintain relationships with third parties to
distribute our service.
ITEM 1. DESCRIPTION OF BUSINESS
Summary
Qorus.com, Inc. intends to exploit the explosive worldwide growth in
the information and communications industry. Qorus provides value-added Internet
Protocol based communications solutions. Qorus uses a ubiquitous Internet based
services platform to offer a number of solutions targeted at the convergence of
the Internet and telecommunications.
Qorus intends to consolidate and simplify voice, e-mail, paging, and
fax messaging. According to a recent survey, the average worker manages 190
messages a day, including e-mail, faxes, voice mail and standard mail. In 1998,
in the United States, there were over 2.8 trillion e-mail messages and over 2
trillion minutes of usage on the public phone network. In addition to desktop
devices, there were 55.3 million pagers, 56 million cell phones, and 8 million
personal communications services phones also in use. The simple fact is that the
number of messages and mediums is growing out of control.
Qorus' service simplifies sending and receiving messages by
consolidating all inbound messages and letting the user select the most
effective and suitable mode for receiving and responding to these messages.
Specifically, it enables the user to send, receive, sort and filter voice
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mail, e-mail, faxes, and pages from any phone or Internet ready device in the
world. In addition, it enables the user to listen to text-based messages, such
as e-mail, and reply to them by voice. Advanced features will even translate
voice and text from one language into another.
In 1998, service revenue from voice-mail and e-mail was estimated at
over $8 billion. Analysts estimate that by 2002 service revenue for these
applications will approach $12 billion. We plan to market our services to
Internet service providers and small to medium sized telecommunications
carriers.
We believe that the convergence of voice and data networks will be the
most significant event to impact the information and communications industry
over the next few years. We also believe that the market for services and
applications based on this converged infrastructure will grow exponentially. We
believe our platform will position us to participate in this growth by enabling
us to offer enhanced services and applications above and beyond unified
messaging. We believe the rapidly evolving e-commerce segment offers especially
promising opportunities and are actively focused on developing solutions
targeted at this market.
Formation History
Qorus was originally incorporated under the laws of the State of
Florida on January 23, 1991, under the name "Speak Up America Association, Inc."
and changed its name to "Golf Ball World, Inc." on January 16, 1996. Golf Ball
World changed its name to "Qorus.com, Inc." on May 7, 1999, in connection with
its acquisition of all of the issued and outstanding capital stock of Qorus.com,
Inc., a Delaware corporation. The shares of common stock of Qorus currently
trade on the OTC Bulletin Board under the ticker symbol "QRUS."
Qorus.com, Inc., the Delaware corporation, was incorporated under the
laws of the State of Delaware on March 10, 1999, under the name "GOBIG, Inc."
for the purpose of engaging in the telecommunications services business. GOBIG
changed its name to "Qorus.com, Inc." on March 24, 1999. To avoid confusion, we
will refer to Qorus.com, Inc., the Delaware corporation, as Qorus Delaware. On
or about April 15, 1999, Qorus Delaware entered into certain transactions with
Tornado Development, Inc. and commenced business operations.
On or about May 19, 1999, the stockholders of Qorus.com, Inc., the
Delaware corporation, entered into an Acquisition Agreement with Golf Ball
World. Pursuant to the Acquisition Agreement, each of those stockholders
exchanged their shares of Qorus Delaware common stock for an aggregate of
5,332,334 shares of the common stock of Golf Ball World. As a result of such
exchange, Qorus Delaware became a wholly owned subsidiary of Golf Ball World and
the former stockholders of Qorus Delaware acquired approximately 71.5% of the
issued and outstanding shares of Qorus. As provided in the Acquisition
Agreement, Golf Ball World changed its name to "Qorus.com, Inc." On or about
October 5, 1999, Qorus Delaware was merged with and into Qorus.
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Business Overview
Our strategic objective is to become a leader in enhanced
communications solutions. We intend to focus on the small and home office market
and rapidly obtain market penetration by developing distribution relationships.
In a recent survey, analysts found that 50% of small businesses have
access to the Internet and plan to use it for primarily e-mail and fax
communications and e-commerce. We believe our basic service offering provides a
simple, cost-effective solution for this market. Once Qorus establishes a
presence with its basic service offering, we will market value-added trust and
e-commerce solutions.
To obtain market penetration rapidly, we intend to establish
distribution relationships with organizations that provide products and services
to the small and home office market. We have targeted Internet service
providers, commonly called ISPs, and small and medium telecommunications
carriers as our distribution partners.
ISPs provide small and home office markets with access to the Internet.
Most offer basic e-mail services. Qorus' service enhances the ISP's basic
offering and provides differentiation in a commodity business. In addition, most
ISPs have little or no experience in voice and voice mail systems. Our service
provides them with an enhanced communication solution that does not require a
large investment.
Small and medium telecommunications carriers target the small and home
office market. These carriers often offer customers voice mail as an enhanced
service. Our service enhances the ISP's offering and has been shown to reduce
customer churn by as much as 80%. In addition, unified messaging is expected to
provide two to three times more revenue than voice mail alone because of
increased usage. As Qorus penetrates the small and home office market, we intend
to expand into the mass consumer and large enterprise market. Both provide
opportunity and challenges.
The mass consumer market is a large but fragmented market. Analysts
expect that consumers will move to unified messaging as a means to simplify
communications at home. The challenge in this market is reaching the consumer
and providing convenience at a reasonable price. We will use our relationships
with ISPs and advertising on the Internet to reach this segment.
We will also market our service to the large enterprise market. This
market presents the biggest challenge. These organizations are more likely to
purchase customer premise equipment based solutions and manage them internally.
In addition, they have significant legacy system issues and would consume
significant sales and support resources.
We intend to enter this market by targeting branch offices and parts of
the organizations that travel extensively. We intend to develop relationships
with systems integrators and telecommunications companies to assist with this
market. We will utilize a direct sales force to market directly to our
distribution partners. We will develop standard and custom service packages
designed for specific markets and needs. The service offerings will be
positioned to address customer needs.
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Services Platform
Our services platform is based on software obtained through a global
license from Tornado Development. The Company has made a strategic investment in
Tornado Development to secure access to the technology, influence development
priorities and provide corporate direction.
The software is built on an Oracle database and has the ability to
manage vast amounts of information efficiently. The key to the system, and what
differentiates it from other software platforms, is that it stores all
information as "objects" instead of medium specific data. Audio, text, video, or
any input medium is received and transformed into a neutral object that is then
identified and catalogued into the database. Each of these objects is labeled
with information describing their contents. For example, the input medium might
be labeled by owner, mime type, sub type, size, date, subject, from or to. With
this information, the database is able to determine what to do with these
objects quickly. For example, the software can save, copy, forward to others,
send or schedule for future delivery. The software includes the ability to
manipulate these objects based on the instruction from the database accepting
whatever it receives through its input and translating it into something that is
compatible with its output and sending it to its next destination.
The software provides a robust set of features and can be accessed from
multiple devices such as computer, telephone, and personal data assistants.
Additional features and access devices can be quickly added because the
underlying engine, Oracle database, is based on open architecture standards. We
intend to add new features continually both from Tornado Development and other
developers with the goal of providing the best products in the marketplace.
Services and Features
We offer services on an outsourced basis to our customers. These
services can be customized or branded to meet the unique needs of each customer.
We believe we can offer service solutions to our customers on a timelier basis
than our hardware-based competitors and offer more robust features than our
service based competitors.
Unified Messaging
Our initial service offering will be unified messaging. This service
consolidates in-bound voice, e-mail, and fax messages and enables the user to
receive these messages by either voice or text. One of the powerful features of
this system is that it can translate voice to text and text to voice. As a
result, the user can pick the medium through which they receive messages and the
medium through which they send messages. For example, a user can listen to an
e-mail via a mobile phone and respond by voice and have the system translate and
reply in an e-mail communication.
The range of available options will appeal to users in many walks of
life. Careful customer segmentation and service packaging will be required to
ensure that the right messages are being communicated and that users do not
become overwhelmed with the robust set of options. To prevent
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feature overload, the system is functionality scaleable and multiple service
bundles can be created to meet the needs of specific customer segments.
Following is a brief listing of the features of the Qorus
system/service. End user features include:
o Basic functionality: email, voicemail, paging and faxing
o Single account for all services
o "Personal portal" approach for all message and account
management
o Voice to text and text to voice translation
o Scheduled/event triggered forwarding
o Alert and notification of messaging events
o Low cost
o Flexible/highly user configurable
Operational features of the system include:
o Low cost of deployment
o Highly scalable system
o Scalable functionality
o Efficient registration process
o Least cost fax routing
o Neutral object storage (i.e. not voice or data centric)
o Remote configuration and management (efficient operation)
o Integrated billing (efficient operation)
We will also offer enhanced services to our basic unified messaging
offering. Initial enhanced services will include secure message delivery and
trust services. These features include:
o Encrypted delivery
o Delivery certification (confirmed)
o Postmarking
o Tracking/audit trail
o Sender confidentiality
o Transaction archiving
o High reliability mass/multi-medium delivery
Enhanced Business Services
Our plan is to leverage the messaging platform by providing e-commerce
communications solutions. We are in the process of designing messaging and
verification solutions for companies that are implementing "paperless" or
electronic services. For example, we are currently working on providing an
e-ticket solution for a major U.S. based airline. In this case, the airline is
seeking to
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reduce its cost of delivering e-ticket information while building its affinity
frequent flyer program. Our solution accomplishes both and is expected to be
implemented by the end of the year.
Over the next two years we intend to add to our suite of services in
the following areas:
o User Conveniences (calendaring, event notification, "follow-me
phone")
o Personal Time Management
o Language and Linguistics Communication (multiple language
translation of e-mail, voice mail, fax, and page at object
level; voice activated commands)
o Business Services (digital identity, notary services,
certified mail, archiving, safety deposit box, control and
distribution of valued content, whiteboard collaboration,
conferencing, e-mail conference rooms)
We are also in the process of identifying additional e-commerce
messaging solutions. We are also investigating joint ventures and strategic
partnerships to expand our potential customer base and expand our service
solutions.
Competition
The industry is new and rapidly evolving. We expect competition to
intensify as the market grows. There are three segments in the market, those
that offer customer premise equipment based solutions, software based solutions
and outsource providers.
The customer premise equipment based solutions providers are the large
telecommunications equipment vendors such as Lucent and Nortel and the large
communications carriers such as AT&T and MCI/WorldCom. The target market for
these competitors is large enterprises where they already provide products and
services. The challenge in this market is integration of the customer premise
equipment solution with legacy systems, both voice and data.
There are several new competitors that offer software based service
solutions. Most of these are relatively small and are focused on selling
software licenses to large enterprises. Some of the competitors in this segment
include iPost, Orchestrate, General Magic Portico, UPA, Wildfire, and Jfax.
These competitors face the same challenges of dealing with the large enterprise
market integration and sales and support requirements.
Recently, several new competitors have entered the outsource service
market. These include Linx Communications and Call Sciences. They tend to be
regionally focused and are competing directly with the ISPs and the
telecommunications carriers. These competitors lack distribution and rely
exclusively on Internet search engines to market their offerings.
We believe Qorus has several advantages over our competition. Our
solution is an Internet based solution that offers more features and supports
more communication mediums than any one competitor. Some competitors offer
Internet based solutions, but none of these systems is Java based, and therefore
not independent of the user's type of computer and software. We are committed to
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maintaining a technical advantage over our competitors. We have chosen this
platform as the basis of our service offerings because of our strong belief of
the proliferation of the Internet and the convergence of voice, video, and data
to this medium.
Most of our competitors are targeting large organizations and selling
customer premise equipment solutions or licensing software. We believe that this
market will be slow to adopt enhanced messaging services. Most of the companies
in this market are working on Y2K initiatives or upgrading legacy systems to new
technology. Buyers in these organizations include the information technology and
communications departments, two groups that are difficult to coordinate. They
require significant sales and support resources to service long sales lead
times. Our target market is more likely to use an Internet based solution and
plan to use it in the near future. In addition, smaller organizations do not
have the legacy system problem and are willing to outsource a non-revenue
producing activity of their business.
We recognize that rapidly building market share is critical to the
success of Qorus. Most of our competitors are relying on an internal sales force
or direct marketing through the Internet for its distribution. We believe we can
offer significant value to our distribution partners. Our solution is a complete
outsource solution that enables our partners to differentiate themselves in the
market place and leverage their customer base without investment or service
risk.
Industry
The communications industry is undergoing significant change and rapid
growth. This is being fueled by four key elements:
o Deregulation and the introduction of competition on a global
basis
o Rapid advancement of computer and communications technology
that is increasing speed, capacity, and quality
o The emergence of the Internet as a significant communications
medium
o A deflationary environment that has reduced cost and
stimulated demand
In this industry, the Internet is the fastest growing segment. Analysts
expect the number of web users to grow from 69 million in 1997 to over 300
million by the year 2002. The cornerstone of activity of these users is e-mail.
By year 2000, mailboxes are expected to grow to over 200 million and e-mail
messages in the U.S. are expected to grow to over 5 trillion.
In addition to e-mail, the Internet is starting to attract fax and
voice traffic. For example, Internet telephony represented about $2 billion of
revenue in 1998. Analysts expect that by the year 2002, Internet telephony
revenue will exceed $25 billion. Fax traffic is growing even faster. The
Internet is attracting so much traffic; some analysts are estimating that by the
year 2003 90% of the global bandwidth will be consumed by Internet traffic.
The Internet is rapidly maturing into a global communications medium.
It is evolving from passive publishing to an interactive communications and
applications environment. It will continue to play an increasingly important
role in electronic commerce, become the dominant source of
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information, and we believe it will be the medium of choice for converged voice,
data, and video communications.
Year 2000 Compliance
Many currently installed computer systems and software products are
unable to distinguish between twentieth century dates and twenty-first century
dates. As a result, many companies' software and computer systems may need to be
upgraded or replaced to comply with these "Year 2000" requirements. Qorus'
business is dependent upon on the operation of numerous systems that could
potentially be impacted by Year 2000 related problems.
The third-party vendor upon which we materially rely is Tornado
Development, which provides the software on which our services platform is
based. Tornado Development has responded to our inquiries into its Year 2000
readiness. Tornado Development has warranted to Qorus that the unified messaging
and related software provided by Tornado Development is Year 2000 compliant. In
addition, we plan to seek verification from other key vendors, distributors and
suppliers that they are Year 2000 compliant or, if they are not presently
compliant, to provide a description of their plans to become compliant. To the
extent that vendors fail to provide certification that they are Year 2000
complaint by October 1999, we will seek to terminate and replace these
relationships with those who are Year 2000 compliant. Until our vendors,
distributors and suppliers have provided verification of their compliance, we
will not be able to completely evaluate whether our systems will need to be
revised or replaced.
Qorus is also conducting an internal assessment of all material
information technology and non-information technology systems at our
headquarters for Year 2000 compliance. Our internal assessment involves the
analysis of both mission critical and non-critical systems. The assessment of
all mission critical systems is complete and we believe all such systems are
Year 2000 compliant. Non-critical systems are still being assessed and have a
final confirmation date of October 31, 1999. However, due to the complex nature
of our services and the fact that our systems are interconnected with other
carriers and suppliers, both domestic and international, Qorus is unable to
guarantee Year 2000 compliance or provide Year 2000 warranties.
To date, we have not incurred and do not expect to incur any material
costs in identifying or evaluating Year 2000 compliance issues. Most of our
expenses have related to, and are expected to continue to relate to, the
upgrades or replacements, when necessary, of software or hardware, as well as
costs associated with time spent by employees in the evaluation process and Year
2000 compliance matters generally. These expenses are not expected to be
material to our financial position or results of operation. These expenses,
however, if higher than anticipated, could have a material and adverse effect on
our business, results of operations and financial condition.
Based upon the Year 2000 disclosure statements that we have received
from Tornado Development there can be no assurance that we will not discover
Year 2000 compliance problems in our systems that will require substantial
revisions or replacements. In the event that the operational facilities are not
Year 2000 compliant, we may be unable to deliver services to our customers. In
addition, there can be no assurance that third-party software, hardware or
services incorporated into our material systems, especially of those vendors
that have indicated that they cannot assure Year 2000
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compliance, will not need to be revised or replaced, which could be
time-consuming and expensive. Our inability to fix or replace third-party
software, hardware or services on a timely basis could result in lost revenues,
increased operating costs and other business interruptions, any of which could
have a material adverse effect on our business, results of operations and
financial condition. Moreover, the failure to address Year 2000 compliance
issues in our software, hardware or systems adequately could result in claims of
mismanagement, misrepresentation or breach of contract and related litigation,
which could be costly and time-consuming to defend.
In addition, there can be no assurance that governmental agencies,
utility companies, Internet access companies and others outside our control will
be Year 2000 compliant. The failure by these entities to be Year 2000 compliant
could result in a systemic failure beyond our control, including, for example, a
prolonged Internet, telecommunications or electrical failure, which could also
prevent us from delivering our services to our users, decrease the use of the
Internet or prevent users from accessing our services, any of which would have a
material adverse effect on our business, results of operations and financial
condition.
Currently, we do not have a contingency plan to deal with the worst
case scenario that might occur if technologies on which we depend are not Year
2000 compliant and fail to operate effectively after the Year 2000. The results
of our Year 2000 compliance evaluation and the responses received from
distributors, suppliers and other third parties with which we conduct business,
especially of those vendors that have indicated that they cannot assure Year
2000 compliance, will be taken into account in determining the need for and
nature and extent of any contingency plans.
If our present efforts to address the Year 2000 compliance issues
discussed above are not successful, or if distributors, suppliers and other
third parties with which we conduct business do not successfully address such
issues, our users could seek alternate suppliers of our products and services.
Any material Year 2000 problem could require us to incur significant
unanticipated expenses to remedy and could divert our management's time and
attention, either of which could have a material adverse effect on our business,
operating results and financial condition.
Government Regulation
There are presently few laws and regulations that apply specifically to
access to, or commerce on, the Internet. Due to the increasing popularity and
use of the Internet, however, it is possible that laws and regulations with
respect to the Internet may be adopted at federal, state, provincial and even
local levels, covering issues such as user privacy, freedom of expression,
pricing, characteristics and quality of products and services, taxation,
advertising, intellectual property rights, information security and the
convergence of traditional telecommunications services with Internet
communications. Such future regulations may have a material adverse effect on
Qorus and its business.
Although sections of the U.S. Communications Decency Act of 1996 that,
among other things, proposed to impose criminal penalties on anyone distributing
"indecent" material to minors over the Internet were held to be unconstitutional
by the U.S. Supreme Court, similar laws may be proposed, adopted and upheld in
the U.S. or other jurisdiction. The nature of future legislation and the manner
in which it may be interpreted and enforced cannot be fully determined and,
therefore, legislation similar to the Communications Decency Act could subject
Qorus or its customers to potential liability, which in turn could have a
material adverse effect on our business, results of operations and financial
condition.
The adoption of any such laws or regulations might decrease the growth
of the Internet, which in turn could decrease the demand for the services of
Qorus or increase the cost of doing business or in some other manner have a
material adverse effect on our business, results of operations and financial
condition.
In addition, applicability to the Internet of existing laws governing
issues such as property ownership, copyright and other intellectual property
issues, taxation, libel, obscenity and personal privacy is uncertain. The vast
majority of such laws were adopted prior to the advent of the Internet and
related technologies and, as a result, do not contemplate or address the unique
issues of the Internet and related technologies. Changes to such laws intended
to address these issues could create uncertainty in the marketplace that could
reduce demand for the services of Qorus or increase the cost of doing business
as a result of costs of litigation or increased service delivery costs, or could
in some other manner have a material adverse effect on our business, results of
operations and financial condition.
Qorus is not currently subject to direct regulation by the Federal
Communications Commission or any other governmental agency, other than
regulations applicable to businesses in general. However, in the future, we may
become subject to regulation by the FCC or another regulatory agency. Our
business could suffer depending on the extent to which our activities are
regulated or proposed to be regulated.
Qorus collects sales and other taxes in the states and countries in
which we have offices and are required by law to do so. One or more
jurisdictions have sought to impose sales or other tax obligations on companies
that engage in online commerce within their jurisdictions. A successful
assertion by one or more jurisdictions that we should collect sales or other
taxes on our products and services, or remit payment of sales or other taxes for
prior periods, could have an adverse effect on our business. It is possible that
U.S. states may impose taxes on Internet based commerce after October 21, 2001
after the moratorium on such taxes imposed by the Internet Freedom Act expires.
The materiality of such taxes on our results of operations cannot be estimated
at this time.
The growth of the Internet, coupled with publicity regarding Internet
fraud, may lead to the enactment of more stringent consumer protection laws. If
Qorus becomes subject to claims that we have violated any laws, even if we
successfully defend against these claims, our business could suffer. Moreover,
new laws that impose restrictions on our ability to follow current business
practices or increase our costs of doing business could hurt our business.
Employees
As of September 30, 1999, we employed nine people, two of whom are
engaged in marketing and sales, four in research and development, and three in
management and administration. Our employees are not represented by a collective
bargaining unit. We consider relations with our employees to be good.
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Risk Factors
In addition to the other information set forth elsewhere in this
registration statement, you should carefully consider the following risk factors
in evaluating the merits of an investment in Qorus.
WE ARE IN THE DEVELOPMENT STAGE OF OUR BUSINESS PLAN AND HAVE HAD NO EARNINGS.
OUR FAILURE TO GENERATE REVENUE IN THE FUTURE WOULD MATERIALLY ADVERSELY AFFECT
OUR ABILITY TO CONTINUE AS A GOING CONCERN.
Qorus began its present business in early 1999 and, as of the date of
this registration statement, has not generated significant revenue.
WE MAY NEED SUBSTANTIAL ADDITIONAL FINANCING TO CONTINUE AS A GOING CONCERN. WE
HAVE NO PRESENT COMMITMENTS TO OBTAIN SUCH FINANCING.
In addition, our failure to obtain substantial additional financing
would materially adversely affect our ability to implement our business plan
and to develop our services and products.
OUR UNIFIED MESSAGING SERVICE IS IN THE EARLY STAGE OF DEVELOPMENT. OUR FAILURE
TO DEVELOP OUR UNIFIED MESSAGING SERVICE, OR TO DEVELOP IT IN A TIMELY MANNER,
WOULD MATERIALLY ADVERSELY AFFECT OUR FUTURE RESULTS OF OPERATIONS.
Qorus' services are designed as an electronic messaging system which
affords effective and efficient communication among e-mail, fax, pager and voice
mediums, via the Internet or over the phone. The market for Qorus' services is
at an early stage of development, is rapidly evolving and is characterized by an
increasing number and size of market entrants who have introduced or are
developing competing products or services. Demand and market acceptance for
recently introduced services is subject to a high level of uncertainty. There
can be no assurance that unified messaging related products and services
developed by others will not adversely affect our competitive position or render
our services noncompetitive.
OUR BUSINESS IS DEPENDENT ON THE FUTURE SUCCESS OF THE INTERNET.
We are dependent on the future success of the Internet and whether it
continues to grow and be utilized as a communications medium. If consumers lack
confidence in utilizing Internet based services, because of inadequate
development of the necessary infrastructure or as a result of security issues,
and the Internet does not become or continue as a viable communication medium,
our business, operating results and financial condition will be materially
adversely affected.
WE FACE SUBSTANTIAL COMPETITION IN THE TELECOMMUNICATIONS INDUSTRY, AND MANY OF
OUR COMPETITORS ARE LARGER AND HAVE MORE RESOURCES THAN WE HAVE. OUR FAILURE TO
COMPETE SUCCESSFULLY WITH EXISTING OR FUTURE COMPETITORS WOULD MATERIALLY
ADVERSELY AFFECT OUR FUTURE RESULTS OF OPERATIONS.
The market for our services is extremely competitive, subject to rapid
change and characterized by constant demand for new features, new enhancements,
and lower prices. Possible competitors range from small companies with limited
resources to very large companies with substantially greater financial,
technical, managerial, and marketing resources.
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Competitors may be able to develop and offer products and services that are
comparable or superior to those offered by Qorus or adapt more quickly
than Qorus to new technologies or evolving customer requirements.
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FUTURE REGULATION OF THE INTERNET OR E-COMMERCE BY VARIOUS GOVERNMENT
AUTHORITIES COULD ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL RESULTS.
Only a small body of laws and regulations currently apply specifically
to content of, access to, or commerce on, the Internet. However, laws and
regulations with respect to the Internet may be adopted by governments in any of
the jurisdictions in which Qorus can sell its services and products, covering
issues such as user privacy, freedom of expression, pricing, characteristics and
quality of products and services, taxation, advertising, intellectual property
rights, information security and the convergence of traditional
telecommunications services with Internet communications. To the extent the
adoption of such laws and regulations increases our costs or expenses or
decreases the demand for our services and products, our business and financial
results would be adversely affected.
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A SIGNIFICANT PERCENTAGE OF OUR OUTSTANDING COMMON STOCK IS CONTROLLED BY
INSIDERS. THEREFORE, CURRENT MANAGEMENT CAN CONTINUE TO GOVERN THE COMPANY AND
MAY DETER A CHANGE IN CONTROL WHICH COULD BE BENEFICIAL TO OTHER STOCKHOLDERS.
Qorus' executive officers and directors will, in the aggregate,
beneficially own approximately 44.81% of Qorus' outstanding common stock. As a
result, such persons, acting together, will have the ability to control most
matters submitted to stockholders of Qorus for approval (including the election
and removal of directors) and to control the management and affairs of Qorus.
Accordingly, such concentration of ownership may have the effect of delaying,
deferring or preventing a change in control of Qorus, impeding a merger,
consolidation, takeover or other business combination involving Qorus or
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of Qorus, which in turn could have a material
adverse effect on Qorus' market value.
OUR COMMON STOCK TRADES ONLY SPORADICALLY AND HAS EXPERIENCED IN THE PAST, AND
IS EXPECTED TO EXPERIENCE IN THE FUTURE, SIGNIFICANT PRICE AND VOLUME
VOLATILITY, WHICH SUBSTANTIALLY INCREASES THE RISK OF LOSS TO PERSONS OWNING
OUR COMMON STOCK.
- 14 -
<PAGE> 15
Because of the limited trading market for our common stock, and because
of the possible price volatility, you may not be able to sell your shares of
common stock when you desire to do so. The inability to sell your shares in a
rapidly declining market may substantially increase your risk of loss because of
such illiquidity and because the price for our common stock may suffer greater
declines because of its price volatility.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements of Qorus and the related
notes thereto included elsewhere in this registration statement. The
consolidated statements of operations set forth below with respect to the
interim six-month period ended June 30, 1999 and the years ended December 31,
1998 and 1997 are derived from the consolidated financial statements of Qorus
included elsewhere in this registration statement.
<TABLE>
<CAPTION>
June 30, December 31, December 31,
BALANCE SHEET DATA 1999 1998 1997
(Unaudited)
<S> <C> <C> <C>
Cash and cash equivalents $ 287,939 $ 11 $ 1,750
Total Assets 3,918,885 11 11,190
Accumulated deficit (1,497,782) (208,620) (120,668)
Total shareholders' equity (deficit) 2,607,072 11 (11,923)
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31, December 31,
STATEMENT OF OPERATIONS 1999 1998 1997
(Unaudited)
<S> <C> <C> <C>
Revenues $ 0 $ 0 $ 32,994
Total costs and expenses 1,273,429 76,458
40,770
Loss from continuing operations (1,273,429) (40,770) (43,464)
Other income (expense), net (15,733) -- --
Loss from discontinued operations (47,182)
Net Loss $(1,289,162) $ (87,952) $ (43,464)
Basic loss per share continuing operations (0.3429) (0.0186) (0.0201)
Basic loss per share discontinued operations (0.0231)
Total basic loss per share $ (0.3429) $ (0.0399) $ (0.0201)
Shares used in computing loss per share 3,759,863 2,209,108 1,840,000
</TABLE>
Qorus provides value-added Internet protocol based communications
solutions using an ubiquitous Internet based services platform to offer a
variety of solutions targeted at the convergence of the Internet and
telecommunications.
- 15 -
<PAGE> 16
Qorus was incorporated on January 23, 1991 as "Speak Up America
Association, Inc." On December 22, 1995 a shareholder contributed 100% of the
common stock of Golf Balls N' Golf Balls, Inc. to the company and the company
changed its name to "Golf Ball World, Inc." The company operated through
December 30, 1998, at which time the company distributed 100% of the common
stock of Golf Balls N' Golf Balls, Inc. to its shareholders as a dividend.
On May 4, 1999, the company's board of directors adopted a resolution
to amend the articles of incorporation and change the name of the corporation to
Qorus.com, Inc. On May 19, 1999 the Company acquired 100% of the common stock of
Qorus.com, Inc., a Delaware corporation, in exchange for 5,332,334 shares of the
company's common stock.
Because of the change in primary business segment, discussion and trend
analysis of the discontinued operations of Qorus is not meaningful to the
business going forward. Qorus had no revenues from December 31, 1997 through
June 30, 1999.
During the six months ended June 30, 1999, Qorus incurred significant
expenses in developing its product, software and market. The majority of these
expenses are salaries and professional fees. Interest expense of $12,500 was
accrued to a related party.
During the year ended December 31, 1998, Qorus incurred certain
selling and administrative costs amounting to $40,770. The majority of these
expenses are software, salaries and professional fees.
During the year ended December 31, 1997, the company conducted
operations as Golf Ball World and had revenues of $32,994. Cost of sales
amounted to $28,795 resulting in a gross profit of $4,199, or approximately 13%.
Selling and administrative expenses amounted to $47,663, resulting in a loss
from operations of $43,464.
Qorus will need to raise additional funds to meet its cash requirements
for continuing operations in the next 12 months. We presently intend to raise
funds through a private placement round of financing to be completed in late
1999 or early 2000. This private placement is intended to raise between
$10,000,000 and $20,000,000, of which $3,000,000 is intended to pay off current
debt, $3,000,000 will be used to buy additional products and services that will
be added to the core unified messaging service, keeping the services offering
ahead of customer requirements. The balance of the money raised will be used as
working capital.
Qorus intends to hire from 12 to 20 additional employees by the fourth
quarter of 2000.
We presently anticipate that approximately $845,000 will be required to
meet operating capital requirements in the fourth quarter 1999 and an additional
$530,000 will be required in the first quarter of 2000. We expect that funds
from operations will be sufficient to cover expenses in the second, third, and
fourth quarters of 2000.
Additional funds will be used in marketing and advertising.
ITEM 3. DESCRIPTION OF PROPERTY
Our executive offices are located at 9800 South Sepulveda Boulevard,
Suite 318, Los Angeles, California. The lease, with a non-affiliated third
party, expires June 15, 2002. Monthly rental is $3,714.
We believe that existing facilities are adequate for our needs through
at least the end of 1999. Should we require additional space at that time, or
earlier, we believe that such space can be secured on commercially reasonable
terms and without undue operational disruption.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
We have set forth in the following table certain information regarding
our common stock beneficially owned on September 30, 1999 for (i) each
shareholder we know to be the beneficial owner of 5% or more of our outstanding
common stock, (ii) each of our executive officers and directors, and (iii) all
executive officers and directors as a group. In general, a person is deemed to
be a "beneficial owner" of a security if that person has or shares the power to
vote or direct the
- 16 -
<PAGE> 17
voting of such security, or the power to dispose or to direct the disposition of
such security. A person is also deemed to be a beneficial owner of any
securities of which the person has the right to acquire beneficial ownership
within 60 days. At September 30, 1999, 11,353,596 shares of our common stock
were outstanding.
<TABLE>
<CAPTION>
Name and Address of Amount of Beneficial
Beneficial Owner Ownership Percent of Class(1)
------------------- -------------------- -------------------
<S> <C> <C>
Thurston Interests LLC 2,275,624 20.04%
190 South LaSalle Street
Suite 1710
Chicago, IL 60606
Apex Investment Fund III 1,641,672 14.46%
233 S. Wacker Dr.
Suite 9500
Chicago, IL 60606
Thomson Kernaghan 1,400,000 12.33%
365 Bay Street
Toronto, ON
M5H2V2 Canada
Spear Leeds & Kellogg 869,019 7.65%
120 Broadway
New York, NY 10271
Patrick J. Haynes, III 2,757,579(2) 24.18%
190 South LaSalle St
Suite 1710
Chicago, IL 60606
George M. Middlemas 1,697,943(3) 14.89%
233 S. Wacker Dr.
Suite 9500
Chicago, IL 60603
William G. Salatich 69,367(4) *
77 Brandon Road
Northfield, IL 60093
Robert T. Isham, Jr 277,807(5) 2.44%
190 South LaSalle St
Suite 1710
Chicago, IL 60606
</TABLE>
- 17 -
<PAGE> 18
<TABLE>
<CAPTION>
Name and Address of Amount of Beneficial
Beneficial Owner Ownership Percent of Class(1)
------------------- -------------------- -------------------
<S> <C> <C>
Michael D. Sohn 416,666(6) 3.67%
9800 South Sepulveda Blvd
Los Angeles, CA 90045
Richard E. Burton 50,000(4) *
9800 South Sepulveda Blvd
Los Angeles, CA 90045
Jack Woodruff 108,333(7) *
9800 South Sepulveda Blvd
Los Angeles, CA 90045
John R. Kemp 41,666(8) *
9800 South Sepulveda Blvd
Los Angeles, CA 90045
Neil C. Ludwig 62,500(9) *
9800 South Sepulveda Blvd
Los Angeles, CA 90045
</TABLE>
All Executive Officers and Directors 5,481,861(10) 44.81%
as a group
*Less than 1%
(1)Calculation of percentage beneficial ownership assumes the exercise by only
the respective named stockholder of all options to purchase common stock held by
such stockholder which are exercisable within 60 days.
(2)Includes 2,275,624 shares held of record by Thurston Interests, LLC, 13,633
shares held of record by Haynes Interests, LLC, 89,681 shares held of record by
Thurston Capital, LLC, 218,388 shares held of record by Thurston Group, Inc.,
105,253 shares held of record by Thurston Offshore Bridge Ltd. and 50,000 shares
issuable upon the exercise of options within 60 days. As a principal of each of
Thurston Interests, LLC, Haynes Interests, LLC, Thurston Capital, LLC, Thurston
Group, Inc. and Thurston Offshore Bridge Ltd., Mr. Haynes shares voting and
investment power with respect to, and may be deemed a beneficial owner of, the
shares held by each such entity.
(3)Includes 1,641,672 shares held of record by Apex Investment Fund III and
50,000 shares issuable upon the exercise of options within 60 days. As a
principal of Apex Investment Fund III, Mr. Middlemas shares voting and
investment power with respect to, and may be deemed a beneficial owner of, the
shares held by Apex Investment Fund III.
(4)Includes 50,000 shares issuable upon the exercise of options within 60 days.
(5)Includes 89,681 shares held of record by Thurston Capital, LLC, 105,253
shares held of record by Thurston Offshore Bridge Ltd. and 50,000 shares
issuable upon the exercise of options within 60 days. As a principal of each of
Thurston Capital, LLC and Thurston Offshore Bridge Ltd., Mr. Isham shares voting
and investment power with respect to, and may be deemed a beneficial owner of,
the shares held by each such entity.
(6)Includes 416,666 shares issuable upon the exercise of options within 60 days.
(7)Includes 108,333 shares issuable upon the exercise of options within 60 days.
- 18 -
<PAGE> 19
(8)Includes 41,666 shares issuable upon the exercise of options within 60 days.
(9)Includes 62,500 shares issuable upon the exercise of options within 60 days.
(10)Includes 879,165 shares issuable upon the exercise of options within 60
days.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the names, positions and ages of our
executive officers and directors. All of our directors serve until the next
annual meeting of stockholders or until their successors are elected and
qualify. Officers are elected by the board of directors and their terms of
office are, except to the extent governed by employment contract, at the
discretion of the board of directors. There is no family relationship between
any director, executive officer or person nominated or chosen by Qorus to
become a director or executive officer.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Patrick J. Haynes, III 50 Chairman and Chairman of the
Executive Committee
George M. Middlemas 53 Director
William Salatich 76 Director
Robert T. Isham, Jr. 47 Director
Michael D. Sohn 52 Chief Executive Officer
Richard E. Burton 45 President
Jack Woodruff 42 Chief Financial Officer
John R. Kemp 45 Vice President, Sales and Marketing
Neil C. Ludwig 52 Vice President, Operations
</TABLE>
Patrick J. Haynes III, Chairman and Chairman of the Executive
Committee, is the co-founder and Senior Managing Director of Thurston Group,
Inc., a private merchant bank in Chicago. Mr. Haynes was also the founder and
President of e.spire Communications (formerly American Communications). Mr.
Haynes currently serves as Chairman of Avery Communications, Inc. He was
previously associated with Merrill Lynch & Company, Oppenheimer & Company and
Lehman Brothers, Inc. as an investment banker.
George M. Middlemas, Director, is a general partner of APEX Management,
L.P., which is the General Partner of the venture capital funds Apex Investment
Fund II, L.P. and Apex Investment Fund Limited Partnership. From March 1991 to
December 1991, Mr. Middlemas acted as an independent consultant providing fund
raising and other advisory services. From 1985 until March 1991, Mr. Middlemas
was a senior Vice President and Principal of Inco Venture Capital
- 19 -
<PAGE> 20
Management, a venture capital firm. He also serves on the Board of Directors of
PureCycle Corporation, Security Dynamics Technologies, Inc., Tut Systems, Online
Resources & Communications and several privately held companies.
William Salatich, Director, was previously President of Gillette North
America and Vice Chairman of the Gillette Company. He has served on the Board of
Directors of Motorola, Eastern Enterprises, New England Merchants Bank of
Boston, Digivision Corporation, Forsythe-McArthur and e.spire Communications.
Mr. Salatich was the recipient of the Citation of Merit from the National
Conference of Christians and Jews and is a Horatio Alger awardee.
Robert T. Isham, Jr., Director, is a Managing Director of the Thurston
Group, a private merchant bank in Chicago. From 1993 to 1996, Mr. Isham ran his
own commercial law practice, concentrating on bankruptcy, workout,
debtor-creditor relations and futures, commodities and securities law.
Previously, he was a partner at McDermott, Will & Emery in Chicago. Mr. Isham is
a Director of Avery Communications, Inc.
Michael D. Sohn, Chief Executive Officer, joined Qorus in May 1999.
Prior to joining Qorus, Mr. Sohn had been President and Chief Operating Officer
of NetDox, Inc., a secure messaging and trust service company, from December
1996 to February 1999. Prior to joining NetDox, Mr. Sohn worked as an
independent consultant helping technology-based companies, in medical equipment
and recreational leisure goods industries, raise capital and develop their
business plans. From 1990 to 1993, he was the President and Chief Executive
Officer of Visual Edge, a systems developer of digital printing systems. Prior
to that, Mr. Sohn was a founder and served as President of International
Operations of Print Technology, a marketer of a small footprint, retail
photo-development franchise from 1988 to 1990. From 1985 to 1988, Mr. Sohn was
President of Eastman Communication, a Kodak company that provided value-added
network products worldwide. During his career, Mr. Sohn has worked with United
Technologies, and Arthur D. Little & Co., Inc.
Richard E. Burton, President, joined Qorus in May 1999. Prior to
joining Qorus, Mr. Burton had been Vice President of Sales and Marketing of
Telinet Technologies, LLC, a unified messaging software developer, from October
1996 to March 1999. Prior to joining Telinet, Mr. Burton was a network services
marketing executive for Xerox in Atlanta, where he was involved in developing a
new line of business within the company to provide network consulting,
integration, and multi-vendor services to clients. During his six years in major
account sales with Novell, Mr. Burton managed accounts with such clients as
Eastman Kodak, Bausch & Lomb, Xerox, Corning, Delta, Coca-Cola, NationsBank and
Federal Express. The company recognized him for his outstanding leadership
skills and sales performance. In addition, Mr. Burton has held senior management
positions with RG Engineering in Rochester, NY and Entre Computer Center in
Columbus, GA.
Jack Woodruff, Chief Financial Officer, joined Qorus in March 1999.
Prior to joining Qorus, Mr. Woodruff was a founder and Chief Financial Officer
of National Data Cabling, Inc., a national provider of data cabling services for
high-speed network infrastructures, from January 1998 to March 1999. From March
1992 to December 1997, Mr. Woodruff served as Corporate Controller
- 20 -
<PAGE> 21
and then Treasurer for Kinko's, Inc., an international chain of 1000 copy
stores. Prior to Kinko's, Mr. Woodruff served four years at Print Technology,
from 1988 to 1992, first as Director of Strategic Planning, then as Director of
Finance and Director of Field Operations. From 1985 to 1988, Mr. Woodruff served
as Vice President Finance at Motivational Media, a production company
specializing in media events for education and business. Mr. Woodruff began his
career at UCLA Center for the Health Sciences from 1980 to 1985 as Senior
Administrative Analyst and then as Assistant Director.
John R. Kemp, Vice President Sales and Marketing, joined Qorus in
February 1999. From January 1995 through December 1998, Mr. Kemp had been
Director-Product Manager for Cellnet Date Systems, Inc., a manufacturer and
operator of wireless networks and Internet data distribution for the utilities
industry. From September 1988 through October 1993, Mr. Kemp had been Director,
Product Marketing for Symbol Technologies a supplier of wireless data collection
systems and enterprise interfaces. During his career, Mr. Kemp has worked with
Daisy Systems Corp. and Advanced Micro Devices Inc. in marketing and engineering
capacities.
Neil C. Ludwig, Vice President - Operations brings over 25 years of
domestic and international experience in logistics and operations. Mr. Ludwig
was previously Director of Logistics for NetDox, Inc., Vice President of
Operations for Visual Edge, a developer of digital printing systems, and Vice
President of International Operations for Print Technology where he was
responsible for the management of a network of international distributors and
international deployment of photo processing systems. Formerly, Mr. Ludwig was
Vice President of Purchasing for Kerr Glass.
ITEM 6. EXECUTIVE COMPENSATION
No compensation was paid in 1998 to an individual serving as Qorus'
chief executive officer or acting in a similar capacity.
Stock Option Plan
In May 1999, our board of directors adopted our 1999 stock option plan
as a means of attracting and retaining superior personnel for positions of
substantial responsibility with Qorus and to provide directors, officers,
employees and consultants with an additional incentive to contribute to the
success of Qorus.
Under the plan, we have reserved an aggregate of 2,000,000 shares of
common stock for issuance pursuant to options. Our board of directors or a
committee of our board of directors will administer the plan, including the
selection of the persons who will be granted options under the plan, the type of
options to be granted, the number of shares subject to each option and the
option price.
- 21 -
<PAGE> 22
Executive Employment Agreements
We have entered into an employment agreement with Michael Sohn pursuant
to which he is employed as the Chief Executive Officer of Qorus. The term
expires on May 31, 2000. The agreement provides for a salary of $25,000 per
month plus 400,000 options immediately exercisable at $1.00 per share. In
addition, Mr. Sohn was granted an additional 100,000 options exercisable at
$1.00 per share, which vest over a three year period. One-sixth of the total
amount vests each six months.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Qorus holds a note receivable in the amount of $2,370,346 due from
NetDox, Inc. The note accrues interest at 10% per annum. NetDox and Qorus are
entities under the common control of the Thurston Group. On July 15, 1999, we
forgave $2,100,000 of indebtedness owed to us by NetDox in partial consideration
of NetDox's sale of certain assets to us.
During the six months ended June 30, 1999, we have compensated the
Thurston Group for professional services in the amount of $156,376, which
related to the acquisition of funding and certain other investment activity.
We owe $500,000 to Thurston Bridge Fund II, an affiliate of the
Thurston Group, in the form of a note payable accruing interest at 10% per
annum. This note is due on demand.
Patrick J. Haynes, III and Robert T. Isham, Jr., directors of Qorus,
are principals of the Thurston Group.
ITEM 8. DESCRIPTION OF SECURITIES
Under our articles of incorporation, we are authorized to issue
up to 50,000,000 shares of common stock, par value $.001 per share, of which
11,353,596 shares were outstanding as of September 30, 1999. We are also
authorized to issue up to 5,000,000 shares of preferred stock, par value $.01
per share of which no shares were issued and outstanding as of September 30,
1999.
- 22 -
<PAGE> 23
Common Stock
Each shareholder is entitled to one vote for each share of common stock
owned of record. The holders of shares of common stock do not possess cumulative
voting rights, which means that the holders of more than 50% of the outstanding
shares voting for the election of directors can elect all of the directors, and
in such event the holders of the remaining shares will be unable to elect any of
our directors. Holders of outstanding shares of common stock are entitled to
receive dividends out of assets legally available at such times and in such
amounts as our board of directors may determine. Upon our liquidation,
dissolution, or winding up, the assets legally available for distribution to our
shareholders will be distributed ratably among the holders of the shares
outstanding at the time. Holders of our shares of common stock have no
preemptive, conversion, or subscription rights, and our shares of common stock
are not subject to redemption. All of our outstanding shares of common stock are
fully paid and non-assessable.
Preferred Stock
Under our articles of incorporation, we are authorized to issue
preferred stock with such designations, rights and preferences as our board of
directors may from time to time determine. Accordingly, our board of directors
is empowered, without stockholder approval, to issue preferred stock with
dividend, liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of our stock. We could
issue preferred stock as a method of discouraging, delaying or preventing a
change of control of Qorus. Our board of directors has not created any series of
preferred stock as of the date of this registration statement.
There are no other provisions in our articles of incorporation or
bylaws that would have an effect of delaying, deferring or preventing a change
in control of Qorus.
- 23 -
<PAGE> 24
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Our shares of common stock are traded over-the-counter and quoted on
the OTCBB under the symbol "QRUS". Prior to May 17, 1999, our shares of common
stock were traded under the symbol "GBLL". The reported high and low bid prices
for the common stock as reported by the National Quotation Bureau, LLC are shown
below for each quarter in the previous two fiscal years and for the first three
quarters of 1999. The quotations reflect inter-dealer prices and do not include
retail mark-ups, mark-downs or commissions. The prices do not necessarily
reflect actual transactions.
<TABLE>
<CAPTION>
Bid Price
--------------
High Low
---- ----
<S> <C> <C>
1997
First Quarter N/A N/A
Second Quarter N/A N/A
Third Quarter N/A N/A
Fourth Quarter N/A N/A
1998
First Quarter N/A N/A
Second Quarter N/A N/A
Third Quarter (First available, August 5) .01 .01
Fourth Quarter .01 .01
1999
First Quarter .01 .01
Second Quarter (April 1 through May 14) .10 .01
Second Quarter (May 17 through June 30) 4.75 5.50
(after the 1-for-3 stock split)
Third Quarter 6.50 5.00
</TABLE>
The last sale price of our common stock on September 30, 1999 was
$5.375, as quoted on the OTCBB. As of September 30, 1999, there were 11,353,596
shares of common stock outstanding and 168 shareholders of record.
Our transfer agent is Florida Atlantic Stock Transfer, Inc., 7130 Nob
Hill Road, Tamarac, Florida 33321.
We have never paid cash dividends on our common stock and we presently
intend to retain future earnings, if any, to finance the expansion of our
business. We do not anticipate that any cash dividends will be paid in the
foreseeable future. Future dividend policy will depend on our earnings, capital
requirements, expansion plans, financial condition and other relevant factors.
ITEM 2. LEGAL PROCEEDINGS
Not applicable.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In 1998, Qorus issued an aggregate of 37,833 shares of common stock (as
adjusted for the 1-for-3 stock split in 1999) to the original investors in Qorus
Florida upon the exercise of outstanding warrants. Each of the warrantholders
represented that he was an "accredited investor" and was acquiring such shares
for investment and not with a view to distributing such shares. A legend to such
effect was placed on the certificates representing such shares, and appropriate
"stop transfer" instructions were given to Qorus' transfer agent. The issuance
of such shares was made without registration under the Securities Act in
reliance on the exemption afforded by Section 4(2) under the Securities Act.
On May 19, 1999, we entered into an Acquisition Agreement with the
thirteen stockholders of Qorus Delaware pursuant to which we issued an aggregate
of 5,332,334 shares of our common stock to them in exchange for 100% of the
issued and outstanding common stock of Qorus Delaware. Each of such stockholders
represented and warranted that it was an "accredited investor" and was acquiring
such shares for investment and not with a view to distributing such shares. A
legend to such effect was placed on the certificates representing such shares,
and appropriate "stop transfer" instructions were given to Qorus' transfer
agent. The issuance was made without registration under the Securities Act of
1933 in reliance upon the exemption from registration afforded by Section 4(2)
under the Securities Act.
- 24 -
<PAGE> 25
On May 19, 1999, Qorus issued an aggregate of 3,896,231 shares of its
common stock to thirty-two investors for a purchase price of $1.00 per share.
Each of such investors was, at the time, a beneficial owner of shares of common
stock of Qorus. Each of such investors also represented and warranted that such
investor was an "accredited investor" and was acquiring the shares for
investment and not with a view to distributing such shares. A legend to such
effect was placed on the certificates representing such shares, and appropriate
"stop transfer" instructions were given to Qorus' transfer agent. The issuance
was made without registration under the Securities Act in reliance upon the
exemption from registration afforded by Section 4(2) under the Securities Act.
At various times between May 19, 1999, and September 30, 1999, Qorus
granted options to purchase an aggregate of 1,425,000 shares of Qorus' common
stock to Qorus' directors and officers pursuant to Qorus' 1999 stock option
plan. Such options were granted in reliance upon the exemption provided in Rule
701 under the Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The articles of incorporation and bylaws of Qorus provide that Qorus
will indemnify, to the full extent and in the manner permitted under the laws of
the State of Florida and any other applicable laws, any person made or
threatened to be made a party to an action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact that he is or was
a director or officer of this corporation or served any other enterprise as a
director or officer at the request of this corporation. These rights of
indemnification are not exclusive of any other rights to which any director or
officer or his legal representative may be entitled.
- 25 -
<PAGE> 26
PART F/S
Index to Consolidated Financial Statements
of Qorus.Com, Inc.
<TABLE>
<S> <C>
Report of Certified Public Accountants F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidated Statements of Cash Flows F-4
Consolidated Statements of Changes in Shareholders' Equity F-5
Notes to Consolidated Financial Statements F-6
</TABLE>
<PAGE> 27
[FAIRCLOTH & ASSOCIATES, P.A. LETTERHEAD]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To The Board of Directors
Golf Ball World, Inc.
We have audited the accompanying consolidated balance sheets of Golf Ball World,
Inc. as of December 31, 1997 and 1998 and the related statements of operations,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Golf Ball World,
Inc. as of December 31, 1997 and 1998 and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has not received significant revenue and has
incurred losses since inception. Accordingly, there is substantial doubt about
the Company's ability to continue as a going concern, unless additional funds
are raised. The financial statements do not include adjustments that might
result from the outcome of this uncertainty.
/s/ FAIRCLOTH & ASSOCIATES, P.A.
Tampa, Florida
February 15, 1999
F-1
<PAGE> 28
QORUS.COM, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998 1997
(Unaudited)
----------- ---------- ----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 287,939 $ 11 $ 1,750
Accounts Receivable 1,475
Inventories 4,469
Prepaid expenses 8,970
----------- ---------- ----------
Total current assets 296,909 $ 11 7,694
=========== ========== ==========
Property and equipment, net 234,013 3,266
Notes receivable from related parties 2,370,346
Investments 1,000,000
Deposits and other assets 17,616 230
----------- ---------- ----------
Total Assets $3,918,885 $ 11 $ 11,190
=========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 770,983 $ 2,903
Accrued expenses 40,830
Notes payable to related parties 500,000
Notes payable to shareholder 20,210
----------- ---------- ----------
Total current liabilities 1,311,813 0 23,113
----------- ---------- ----------
SHAREHOLDERS' EQUITY
Common stock -- par value $.001; 50,000,000, 11,353 221 217
24,000,000 and 24,000,000 shares authorized and
11,353,596, 2,211,033 and 2,173,333 issued and
outstanding at June 30, 1999, December 31, 1998
and 1997 respectively
Preferred stock -- par value $.01 at June 30, 1999;
5,000,000 share authorized and no share issued
and Outstanding. 0
Paid-in capital 4,093,501 208,410 108,528
Accumulated deficit (1,497,782) (208,620) (120,668)
----------- ---------- ----------
Total shareholders' equity 2,607,072 11 (11,923)
----------- ---------- ----------
Total liabilities and shareholders' equity $ 3,918,885 $ 11 $ 11,190
=========== ========== ==========
</TABLE>
F-2
<PAGE> 29
QORUS.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998 1997
(Unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $ 0 $ 0 $ 32,994
Cost and expenses:
Cost of sales 28,795
Selling and administrative expenses 1,267,519 40,770 44,746
Depreciation 5,910 2,917
----------- ----------- -----------
Total costs and expenses 1,273,429 40,770 76,458
----------- ----------- -----------
Loss from continuing operations (1,273,429) (40,770) (43,464)
Other income (expense), net (15,733) -- --
Loss from discontinued operations (47,182)
Net Loss $(1,289,162) $ (87,952) $ (43,464)
============ =========== ===========
Basic loss per share:
Continuing operations (0.3429) (0.0186) (0.0201)
Discontinued operations (0.0231)
----------- ----------- -----------
Total basic loss per share $ (0.3429) $ (0.0399) $ (0.0201)
============ =========== ===========
</TABLE>
F-3
<PAGE> 30
QORUS.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998 1997
(Unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $(1,289,162) (87,952) (43,464)
Adjustments to reconcile net loss to net cash
provided (used) by operations:
Depreciation and amortization expense 5,910 933 2,917
Property and deposits of discontinued operations 2,563
Changes in operating assets and liabilities:
Accounts receivable -- 1,475 (1,475)
Inventories -- 4,469 3,619
Prepaid expenses (8,970)
Deposits and other assets (17,616)
Accounts payable 770,982 (2,903) (6,046)
Accrued expenses 40,830
Other liabilities --
----------- ----------- -----------
Net cash provided (used) by operating activities 785,227 3,041 (3,902)
----------- ----------- -----------
INVESTING ACTIVITIES:
Purchase of property and equipment (239,923)
Purchase of investments (1,000,000)
Issuance of notes receivable (2,370,346) 14,000
----------- ----------- -----------
Net cash provided (used) by investing activities (3,610,270) -- 14,000
----------- ----------- -----------
FINANCING ACTIVITIES:
Borrowings from notes payable 500,000 11,956
Proceeds from issuance of common stock, net 3,896,223 28,275
Contribution to capital 51,401 19,326
----------- ----------- -----------
Net cash provided by financing activities 4,396,223 79,676 31,282
----------- ----------- -----------
Net increase (decrease) in cash & cash equivalents $ 287,928 $ (1,739) $ 833
Cash & cash equivalents, beginning of period
11 1,750 917
----------- ----------- -----------
Cash & cash equivalents, end of period $ 287,939 $ 11 $ 1,750
=========== =========== ===========
</TABLE>
F-4
<PAGE> 31
QORUS.COM, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Total
Shares Common Paid-in- Accumulated Shareholders'
Outstanding Stock Capital Deficit Equity (Deficit)
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 6,520,000 $ 652 $ 88,767 $ (77,204) $ 12,215
Additional Capital contributed 19,326 19,326
Net loss (43,464) (43,464)
----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1997 6,520,000 652 108,093 (120,668) (11,923)
Issuance of common stock 113,100 11 28,264 28,275
Additional Capital contributed 71,611 71,611
Net loss
(87,952) (87,952)
----------- ----------- ----------- ----------- -----------
BALANCE, DEMCEMBER 31, 1998 6,633,100 663 207,968 (208,620) 11
One-for-three reverse stock split (4,422,038) (442) 442
Shares retired (86,031) (9) 9
Change in par value 1,913 (1,913)
Shares issued to acquire Qorus.com 5,332,334 5,332 (5,332)
Issuance of common stock 3,896,231 3,896 3,892,327 3,896,223
Net loss (1,289,162) (1,276,662)
----------- ----------- ----------- ----------- -----------
BALANCE, JUNE 30, 1999 11,353,596 $ 11,353 $ 4,093,501 $(1,497,782) $ 2,607,072
=========== =========== =========== =========== ===========
</TABLE>
F-5
<PAGE> 32
QORUS.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY
Qorus.com, Inc., a Florida corporation ("Company" or "Qorus"), provides
value-added Internet based communications solutions using a ubiquitous
Internet based services platform to offer a variety of solutions targeted
at the convergence of the internet and telecommunications.
The Company was incorporated on January 23, 1991 as "Speak Up America
Association, Inc." On December 22, 1995 a shareholder contributed 100% of
the common stock of Golf Balls N' Golf Balls, Inc. to the Company and the
Company changed its name to "Golf Ball World, Inc." The Company operated
through December 30, 1998, at which time the Company distributed 100% of
the common stock of Golf Balls N' Golf Balls, Inc. to its shareholders as a
dividend.
On May 4, 1999 the Company's board of directors adopted a resolution to
amend the articles of incorporation and change the name of the corporation
to "Qorus.com, Inc." On May 19, 1999 the Company acquired 100% of the
common stock of Qorus.com, Inc., a Delaware corporation, in exchange for
5,332,334 shares of the Company's common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements for the six months ended June 30,
1999 include the accounts of Qorus.com and its wholly-owned subsidiary,
Qorus.com, Inc., a Delaware corporation. All significant intercompany
accounts and transactions have been eliminated.
The consolidated financial statements for the years ended December 31, 1998
and 1997 include the accounts of Golf Ball World, Inc. and its wholly-owned
subsidiary, Golf Balls N' Golf Balls, Inc. All significant intercompany
accounts and transactions have been eliminated.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
CONCENTRATIONS OF CREDIT RISK
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of temporary cash
investments. The Company places its temporary cash investments in
certificates of deposit and with high-quality financial institutions. At
June 30, 1999, substantially all cash and cash equivalents were on deposit
with two financial institutions.
INVENTORIES
Inventories at December 31, 1997, consisted of golf balls and are stated at
lower of cost or market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets,
which range from two to five years. During the six months ended June 30,
1999, depreciation expense totaled $5,910. Leasehold improvements are
amortized over the shorter of the useful life of the asset or the term of
the related lease. Property and equipment at June 30, 1999 consists of:
<TABLE>
<S> <C>
Furniture and fixtures $ 3,504
Office equipment 14,440
Production equipment 212,257
Leasehold improvements 9,722
------------
Total 239,923
Less accumulated depreciation (5,910)
------------
Net property and equipment 234,013
</TABLE>
F-6
<PAGE> 33
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has financial instruments consisting of cash equivalents,
investments, receivables (including those from related parties), accounts
and notes payable. The carrying value of the Company's financial
instruments, based on current market and other indicators, approximate their
fair value.
NET LOSS PER SHARE
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share" that established standards
for the computation, presentation and disclosure of earnings per share
("EPS"), replacing the presentation of Primary EPS with a presentation of
Basic EPS. It also requires dual presentation of Basic EPS and Diluted EPS
on the face of the income statement for entities with complex capital
structures. Basic EPS is based on the weighted average number of common
shares outstanding during the period, which totaled 3,759,863 for the period
ended June 30, 1998.
COMPREHENSIVE INCOME
The only component of comprehensive income the Company has is net income.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Ultimate results could differ from those estimates.
THE COMPANY AS A GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has not received
significant revenues and has incurred significant expenses in developing its
product and strategic relationships.
3. NOTE RECEIVABLE FROM A RELATED PARTY
The note receivable amounting to $2,370,346 accrues interest at 10% per
annum and is due from NetDox, Inc., a related party. NetDox, Inc. and
Qorus.com, Inc. are entities under the common control of Thurston Group. On
July 15, 1999 the Company forgave $2,100,000 of indebtedness owed to the
Company by NetDox in partial consideration of NetDox's sale of certain
assets to the Company. See description of the purchase transaction in note
10 below.
4. INVESTMENT
The Company has an investment in Tornado Development, Inc. amounting to
$1,000,000. The investment relates to a note receivable which converted to
shares based on condition (A) of the Note which states, "that the
outstanding principal and any unpaid accrued interest shall automatically
convert on the earlier of (A) the closing of a financing transaction or
series of related transactions in which Tornado Development, Inc. receives
gross proceeds of $1,000,000 or more, or such lesser amount equal to the
amount advanced under this note." During the six months ended June 30, 1999
the note was converted to 127,344 shares of Tornado's series B preferred
stock.
5. SHAREHOLDERS' EQUITY
The Company is authorized to issue up to 50,000,000 shares of common stock,
$.001 par value, and 5,000,000 shares of preferred stock, $.01 par value, to
be divided into such classes or series as the board of directors may
determine.
During the year ended December 31, 1998 certain warrants were exercised at
$.25 per share for 113,100 pre-split shares of the Company's common stock.
During the year ended December 31, 1997, the Company's founding directors
contributed $19,326 to the Company for working capital.
1999 STOCK OPTION PLAN
The Company's board of directors adopted the 1999 Stock Option Plan (the
"Plan") whereby directors, officers, employees and consultants may receive
option grants as additional incentive to contribute to the success of the
Company.
F-7
<PAGE> 34
Under the Plan, an aggregate of 2,000,000 shares of common stock has been
reserved for issuance pursuant to options ("Plan Options"). The Plan is
administered by the Company's board of directors or a committee of the board
of directors who's responsibilities include, without limitation, the
selection of persons who will be granted Plan Options under the Plan, the
type of Plan Options to be granted, the number of shares subject to each
Plan Option and the Plan Option price.
Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the
Internal Revenue Code of 1986, as amended, or options that do not qualify
(Non-qualified Options"). Any Incentive Option granted under the Plan must
provide for an exercise price of not less than 100% of the fair market value
of the underlying shares on the date of such grant, but the exercise price
of any Incentive Option granted to an eligible employee owning more than 10%
of the Company's common stock must be at least 110% of the fair market value
as determined on the date of grant. The term of each Plan Option and the
manner in which it may be exercised is determined by the Company's board of
directors or the Committee, provided that no Plan Option may be exercisable
more than 10 years after the date of its grant and, in the case of an
Incentive Option granted to an eligible employee owning more than 10% of the
Company's common stock, no more than five years after the date of grant. The
exercise price of Non-qualified Options shall be determined by the Company's
board of directors or the Committee. The per share purchase price of shares
subject to Plan Options granted under the Plan may be adjusted in the event
of certain changes in the Company's capitalization, but any such adjustment
shall not change the total purchase price payable upon the exercise in full
of Plan Options granted under the Plan. The Plan provides that officers,
director, key employees and consultants of the Company or any of its
subsidiary companies will be eligible to receive Non-qualified Options under
the Plan. Only employees are eligible to receive Incentive Options.
Recipients of Plan Options may not assign or transfer such Plan Options
except by will or by the laws of decent and distribution. During the
lifetime of the optionee, an option may be exercised only by such optionee.
If an optionee's employment is terminated for any reason, other than death
or disability or termination for cause, or if an optionee is not an employee
but is a member of the Company's board of directors and his service as a
director is terminated for any reason, other than death or disability, the
Plan Option granted to him shall lapse to the extent unexercised on the
earlier of the expiration date or from 30 days to 5 years following the date
of termination. If the optionee dies during the term of his employment, the
Plan Option granted to him shall lapse to the extent unexercised on the
earlier of the expiration date of the Plan Option or the date from 30 days
to one year following the date of the optionee's death. If the optionee is
disabled, the Plan Option granted to him lapses to the extent unexercised on
the earlier of the expiration date of the Plan Option or the date from 30
days to one year following the date of the disability.
At June 30, 1999, 1,425,000 Plan Options exercisable at $1.00 per share have
been granted, 800,000 of which are immediately exercisable and 625,000 of
which vest over a three year period from date of grant (1/6 of the total
amount each six months).
6. NOTE PAYABLE TO RELATED PARTY
The Company had a note payable at June 30, 1999 due to Thurston Bridge Fund
II, a related party, which accrues interest at 10% per annum and is due on
demand. The Company had a note payable at December 31, 1997 due to a
shareholder which accrues interest at 8.5% per annum and is due on demand.
All interest accrued on the note to the stockholder through December 31,
1997 was waived.
7. RELATED-PARTY TRANSACTIONS
The Company has a note receivable from a related party. See note 3 above
for a more detailed description.
During the six months ended June 30, 1999 the Company has compensated the
Thurston Group, a related party, for professional services in the amount of
$156,376 which related to the acquisition of funding and certain other
investment activity.
The Company has a note payable in the amount of $500,000 due to Thurston
Bridge Fund II, a related party, which accrues interest at 10% per annum
and is due on demand.
F-8
<PAGE> 35
8. COMMITMENTS AND CONTINGENCIES
The Company leases its office facilities in two locations in California.
Lease terms are from one to three years and expire through June 15, 2002.
Rent expense from operating leases totaled $973 for the six months ended
June 30, 1999. Future minimum payments under operating leases are as
follows:
<TABLE>
<S> <C>
1999 $ 28,124
2000 49,437
2001 44,572
2002 24,143
---------
Total $ 146,276
</TABLE>
9. INCOME TAXES
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes", which requires an asset and liability
approach to financial accounting and reporting for income taxes. Deferred
income tax assets and liabilities are computed annually for temporary
differences between the financial statement basis and the income tax basis
of assets and liabilities that will result in taxable or deductible amounts
in the future. Such deferred income tax computations are based on enacted
tax laws and rates applicable to the years in which the differences are
expected to affect taxable income. A valuation allowance is established
when necessary to reduce deferred income tax assets to the amounts expected
to be realized.
10. SUBSEQUENT EVENTS
On July 15, 1999 the Company acquired certain assets from NetDox, Inc.
totaling $5,042,200. As consideration for the assets acquired, the Company
forgave a portion of a promissory note due from NetDox (see note receivable
due from related party) and assumed a note payable to a bank in the amount
of $2,942,200. The note accrues interest at 10% per annum and is due August
31, 2000. A summary of the assets acquired from NetDox follows:
<TABLE>
<S> <C>
Machinery and equipment $ 1,500,000
Brand Name 300,000
Customer lists 1,000,000
Goodwill 2,242,200
-----------
Total $ 5,042,200
===========
</TABLE>
F-9
<PAGE> 36
PART III
ITEM 1. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit Page No.
-------------- ---------------------- --------
<S> <C>
2.1 Articles of Incorporation
2.2 Bylaws
3.1 Form of Common Stock Certificate
of Qorus.com, Inc.
6.1 1999 Stock Option Plan of
Qorus.com, Inc.
6.2 Acquisition Agreement between
Golf Ball World, Inc., a Florida
corporation, and the stockholders
of Qorus.com, Inc., a Delaware
corporation
6.3 Employment Agreement dated May
24, 1999, between Qorus.com,
Inc., a Delaware corporation and
Michael Sohn
8.1 Acquisition Agreement between
Golf Ball World, Inc., a Florida
corporation, and the stockholders
of Qorus.com. Inc., a Delaware
corporation (filed as Exhibit 6.2
hereto)
</TABLE>
ITEM 2. DESCRIPTION OF EXHIBITS
See Item 1, above.
III-1
<PAGE> 37
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
QORUS.COM, INC.
By: /s/ Michael Sohn
-------------------------------------
Michael Sohn
Chief Executive Officer
III-2
<PAGE> 38
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
2.1 Articles of Incorporation
2.2 Bylaws
3.1 Form of Common Stock Certificate of
Qorus.com, Inc.
6.1 1999 Stock Option Plan of Qorus.com, Inc.
6.2 Acquisition Agreement between
Golf Ball World, Inc., a Florida
corporation, and the stockholders
of Qorus.com, Inc., a Delaware
corporation
6.3 Employment Agreement dated May
24, 1999, between Qorus.com,
Inc., a Delaware corporation and
Michael Sohn
8.1 Acquisition Agreement between
Golf Ball World, Inc., a Florida
corporation, and the stockholders
of Qorus.com. Inc., a Delaware
corporation (filed as Exhibit 6.2
hereto)
</TABLE>
<PAGE> 1
EXHIBIT 2.1
[STAMP]
ARTICLES OF INCORPORATION
OF
SPEAK UP AMERICA ASSOCIATION, INC.
ARTICLE I - NAME
The name of this corporation is SPEAK UP AMERICA ASSOCIATION, INC.
ARTICLE II - DURATION
This Corporation shall have perpetual existence commencing on January 23, 1991.
ARTICLE III - PURPOSE
The Corporation may engage in any activity or business permitted under the laws
of the United States and the State of Florida.
ARTICLE IV - CAPITAL STOCK
This Corporation is authorized to issue One thousand (1,000) shares of One Cent
($.01) par value common stock, which shall be designated "Common Shares".
ARTICLE V - INITIAL PRINCIPAL OFFICE AND REGISTERED AGENT
The name and mailing address of the initial principal office and registered
agent of this Corporation is Lawanda Robinson, LCR, Inc., 1180 S.W. 36th Ave.,
Suite 201, Pompano Beach, Florida 33069.
ARTICLE VI - INITIAL BOARD OF DIRECTORS
This Corporation shall have one (1) Director initially. The number of Directors
may be increased or diminished from time to time by the By-Laws, but shall never
be less than one (1). The name and address of the initial Directors of this
Corporation is:
<PAGE> 2
Name Address
---- -------
Marc Joseph 1180 S.W. 36th Ave.
Suite 201
Pompano Beach, FL 33069
ARTICLE VII - BY LAWS
The By-Laws of this Corporation may be adopted, altered, amended or repealed by
either the Stockholder or Directors.
ARTICLE VIII - INDEMNIFICATION
The Corporation shall indemnify any Officer or Director, or any former Officer
or Director, to the full extent permitted by law.
ARTICLE IX - INCORPORATOR
The name and the person signing these Articles is Lawanda Robinson.
ARTICLE X - AMENDMENT
This Corporation reserves the right to amend or repeal any provisions contained
in these Articles of Incorporation, in accordance with the provisions of the
Florida General Corporation Act.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation, this 22nd day of January, 1991.
/s/ LAWANDA ROBINSON
--------------------------------
Lawanda Robinson
Incorporator
<PAGE> 3
ACCEPTANCE BY REGISTERED AGENT
HAVING BEEN NAMED TO ACCEPT SERVICE OF PROCESS FOR THE ABOVE STATED CORPORATION,
AT THE PLACE DESIGNATED IN ARTICLE V OF THESE ARTICLES OF INCORPORATION, THE
UNDERSIGNED CORPORATION HEREBY AGREES TO ACT IN THIS CAPACITY, AND FURTHER
AGREES TO COMPLY WITH THE PROVISIONS OF ALL STATUTES RELATIVE TO THE PROPER AND
COMPLETE DISCHARGE OF ITS DUTIES.
DATED THIS 22 DAY OF JANUARY, 1991.
(Corporate Seal)
By: /s/ Lawanda Robinson
----------------------------------------
Lawanda Robinson
Registered Agent
STATE OF FLORIDA)
COUNTY OF BROWARD)
Before me, a Notary Public authorized in the State and County set forth above,
personally appeared Lawanda Robinson, known to me and known by me to be the
person, who, as Incorporator, executed the foregoing Articles of Incorporation
of SPEAK UP AMERICA ASSOCIATION, INC., and she acknowledged before me that she
executed those Articles of Incorporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal,
in the State and County aforesaid, this 22 day of January, 1991.
/s/ [ILLEGIBLE]
------------------------
NOTARY PUBLIC
My Commission expires:
<PAGE> 4
ARTICLES OF AMENDMENT
TO
THE ARTICLES OF INCORPORATION
OF
SPEAK UP AMERICA ASSOCIATION, INC.
The undersigned, being the Chairperson of SPEAK UP AMERICA ASSOCIATION,
INC., a Florida corporation, and pursuant to the authority contained in the
Florida General Corporation Act, Section 607.134, without the formality of
convening a meeting, do hereby consents to, approve and adopt the following
resolutions by the Board of Directors and without shareholder action as
shareholder action was not required:
BE IT RESOLVED, that the Article of Incorporation which were made effective
on January 23, 1991, be and are hereby amended as follows, and any Articles
in the original character and amendments thereto which are in conflict
herewith, are vacated and are in no force or effect.
ARTICLE I - NAME
The name of the corporation shall be GOLF BALL WORLD, INC.
ARTICLE IV -
CAPITAL STOCK AND PREFERRED STOCK
RESOLVED, that the corporation shall be authorized to issue twenty-four
million (24,000,000) shares of common stock at one tenth of a mill
($.0001) par value and the preferred stock of the corporation will be five
million (5,000,000) shares at one tenth of a mill ($.0001) par value; part
or all of which shares may be issued from time to time by the Board of
Directors, without further action required by the stockholders; and such
shares may be convertible into shares of Common Stock, have cumulative
dividends, be redeemable by the corporation or such other terms and
conditions as may be determined by said Board.
IN WITNESS WHEREOF, the undersigned have executed these Articles
of Amendment this 23 day of December, 1995.
/s/ ROBERT E. HENSBERRY
--------------------------------------
Robert E. Hensberry
Chairperson
President
<PAGE> 5
STATE OF FLORIDA )
)
COUNTY OF BROWARD )
Before me, the undersigned authority, this day personally appeared
Robert E. Hensberry as President and Chairperson, said person having been
duly identified to me in his capacity aforesaid and as the person who
identified the foregoing instrument in my presence; and they acknowledged
the execution thereof to be his free act and deed as such officer for the
uses and purposes therein mentioned, and that the said instrument is the
act and deed of the corporation.
SWORN to and SUBSCRIBED before me this 23 day of December, 1995.
/s/ JOSEPH M. PUGLIANO
-------------------------------
Notary of Public State of
Florida at Large
My Commission Expires: Personally known
------
or Produced Identification X
----
Type of Identification Produced:
FL Drivers License
--------------------------------
[STAMP]
<PAGE> 6
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
GOLF BALL WORLD, INC.
THE UNDERSIGNED, the President of GOLF BALL WORLD, INC., a Florida corporation,
does hereby certify that:
FIRST: That the Board of Directors of said Corporation, by written
consent filed with the minutes of the Board, adopted the following resolutions
proposing and declaring advisable the following amendments to the Certificate of
Incorporation of said Corporation: on May 4, 1999.
"That Article I of the Articles of Incorporation be amended and, as
amended, read as follows:
"I - NAME: The name of the Corporation is "QORUS.COM, INC.";
"That Article IV of the Articles of Incorporation be amended and, as
amended, read as follows:
"IV - CAPITAL STOCK AND PREFERRED STOCK: The Corporation shall be
authorized to issue fifty million (50,000,000) shares of common stock at one
mill ($.001) par value and five million (5,000,000) shares of Preferred Stock
at one cent ($.01) par value; part or all of the shares of Preferred Stock may
be issued from time to time by the Board of Directors, without further action
required by the stockholders; and such Preferred Stock may be convertible into
shares of Common Stock, have cumulative dividends, be redeemable by the
Corporation or contain such other terms and conditions as may be determined by
said Board."
SECOND: The Corporation's outstanding shares of Common Stock are reverse
split on a one-for-three basis, so that each three shares of Common Stock,
$.0001 par value outstanding prior to the reverse split shall become one share
of Common Stock, $.001 par value after the reverse split.
THIRD: That the aforesaid amendments and reverse split were duly adopted
by consent of the requisite majority of the shareholders of this Corporation in
accordance with the applicable provisions of Section 607 of the Business
Corporation Act of the State of Florida, on May 4, 1999.
FORTH: Prompt notice of the taking of these corporate actions is being
given to all stockholders who did not consent in writing, in accordance with
Section 607 of the Business Corporation Act of the State of Florida.
IN, WITNESS WHEREOF, the Corporation has caused this Articles of Amendment
to be signed by Robert E. Hensberry, its President, this 4 day of May 1999.
GOLF BALL WORLD, INC.
By: /s/ ROBERT E. HENSBERRY
-------------------------------
Robert E. Hensberry, President
<PAGE> 1
EXHIBIT 2.2
CORPORATE BYLAWS
ARTICLE I. MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual shareholder meeting of the above
named corporation will be held on the _______ day of _______, of each year or at
such other time and place as designated by the Board of Directors of the above
named corporation provided that if said day falls on a Sunday or legal holiday,
then the meeting will be held on the first business day thereafter. Business
transacted at said meeting will include the election of directors of the above
named corporation.
Section 2. Special Meetings. Special meetings of the shareholders will
be held when directed by the President, Board of Directors, or the holders of
not less than 10 percent of all the shares entitled to be cast on any issue
proposed to be considered at the proposed special meeting; provided that said
persons sign, date and deliver to the above named corporation one or more
written demands for the meeting describing the purposes(s) for which it is to be
held. A meeting requested by shareholders of the above named corporation will be
called for a date not less than 10 nor more than 60 days after the request is
made, unless the shareholders requesting the meeting designate a later date. The
call for the meeting will he issued by the Secretary, unless the President,
Board of Directors or shareholders requesting the meeting designate another
person to do so.
Section 3. Place. Meetings of shareholders will be held at the
principal place of business of the above named corporation or at such other
place as is designated by the Board of Directors.
Section 4. Record Date and List of Shareholders. The Board of Directors
of the above named corporation shall fix the record date; however, in no event
may a record date fixed by the Board of Directors be a date prior to the date on
which the resolution fixing the record date is adopted.
After fixing a record date for a meeting, the Secretary shall prepare
an alphabetical list of the names of all the above named corporation's
shareholders who are entitled to notice of a shareholders' meeting, arranged by
voting group with the address of and the number and class and series, if any, of
shares held by each. Said list shall be available for inspection in accordance
with Florida Law.
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<PAGE> 2
Section 5. Notice. Written notice stating the place, day and hour of
the meeting, and the purpose(s) for which said special meeting is called, will
be delivered not less than 10 nor more than 60 days before the meeting, either
personally or by first class mail, by or at the direction of the President, the
Secretary or the officer or persons calling the meeting to each shareholder
of record entitled to vote at such meeting. If mailed, such notice will be
deemed to be effective when deposited in the United States mail and addressed to
the shareholder at the shareholder's address as it appears on the stock transfer
books of the above named corporation, with postage thereon prepaid.
The above named corporation shall notify each shareholder, entitled to
a vote at the meeting, of the date, time and place of each annual and special
shareholders' meeting no fewer than 10 or more than 60 days before the meeting
date. Notice of a special meeting shall describe the purpose(s) for which the
meeting is called. A shareholder may waive any notice required hereunder either
before or after the date and time stated in the notice; however, the waiver must
be in writing, signed by the shareholder entitled to the notice and be delivered
to the above named corporation for inclusion in the minutes or filing in the
corporate records.
Section 6. Notice of Adjourned Meeting. When a meeting is adjourned to
another time or place, it will not be necessary to give any notice of the
adjourned meeting provided that the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is taken. At
such an adjourned meeting, any business may be transacted that might have been
transacted on the original date of the meeting. If, however, a new record date
for the adjourned meeting is made or is required, then, a notice of the
adjourned meeting will be given on the new record date as provided in this
Article to each shareholder of record entitled to notice of such meeting.
Section 7. Shareholder Quorum and Voting. A majority of the shares
entitled to vote, represented in person or by proxy, will constitute a quorum at
a meeting of shareholders.
If a quorum, as herein defined, is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter thereof will be the act of the shareholders unless otherwise
provided by law.
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<PAGE> 3
Section 8. Voting of Shares. Each outstanding share will be entitled to
one vote on each matter submitted to a vote at a meeting of shareholders.
Section 9. Proxies. A shareholder may vote either in person or by proxy
provided that any and all proxies are executed in writing by the shareholder or
his duly authorized attorney-in-fact. No proxy will be valid after the duration
of 11 months from the date thereof unless otherwise provided in the proxy.
Section 10. Action by Shareholders Without a Meeting. Any action
required or permitted by law, these bylaws, or the Articles of Incorporation of
the above named corporation to be taken at any annual or special meeting of
shareholders may be taken without a meeting, without prior notice and without a
vote, provided that the action is taken by the holders of outstanding stock of
each voting group entitled to vote thereon having not less than the minimum
number of votes with respect to each voting group that would be necessary to
authorize or take such action at a meeting at which all voting groups and shares
entitled to vote thereon were present and voted, as provided by law. The
foregoing actions(s) shall be evidenced by written consents describing the
action taken, dated and signed by approving shareholders having the requisite
number of votes of each voting group entitled to vote thereon and delivered to
the above named corporation in accordance with Florida Law. Within 10 days after
obtaining such authorization by written consent, notice shall be given to those
shareholders who have not consented in writing or who are not entitled to vote.
Said notice shall fairly summarize the material features of the authorized
action and if the action requires the providing of dissenters' rights, said
notice shall comply with the disclosure requirements pertaining to dissenters'
rights of Florida Law.
ARTICLE II. DIRECTORS
Section 1. Function. All corporate powers, business, and affairs will
be exercised, managed and directed under the authority of the Board of
Directors.
Section 2. Qualification. Directors must be natural persons of 18 years
of age or older but need not be residents of this state and need not be
shareholders of the above named corporation.
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<PAGE> 4
Section 3. Compensation. The Board of Directors will have authority to
fix the compensation for directors of the above named corporation.
Section 4. Presumption of Assent. A director of the above named
corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken will be presumed to have assented to
the action taken unless such director votes against such action or abstains from
voting in respect thereto because of an asserted conflict of interest.
Section 5. Number. The above named corporation will have ________
director(s).
Section 6. Election and Term. Each person named in the Articles of
Incorporation as a member of the initial Board of Directors will hold office
until said directors will have been qualified and elected at the first annual
meeting of shareholders, or until said directors earlier resignation, removal
from office or death.
At the first annual meeting of shareholders and at each annual meeting
thereafter, the shareholders will elect directors to hold office until the next
annual meeting. Each director will hold office for a term for which said
director is elected until said director's successor will have been qualified and
elected, said director's prior resignation, said director's removal from office
or said director's death.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors
will be filled by the affirmative vote of a majority of the shareholders or of
the remaining directors even though less than a quorum of the Board of
Directors. A director elected to fill a vacancy will hold office only until the
next election of directors by the shareholders.
Section 8. Removal and Resignation of Directors. At a meeting of
shareholders called expressly for that purpose, any director or the entire Board
of Directors may be removed, with or without cause, by a vote of the holders of
a majority of the shares then entitled to vote at an election of directors.
A director may resign at any time by delivering written notice to the
Board of Directors or its chairman or to the above named corporation by and
through one of its officers. Such a resignation is effective when the notice is
delivered unless a later effective date is specified in said notice.
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<PAGE> 5
Section 9. Quorum and Voting. A majority of the number of directors
fixed by these Bylaws shall constitute a quorum for the transaction of business.
The act of a majority of the directors present at a meeting at which a quorum is
present will be the act of the Board of Directors.
Section 10. Executive and Other Committees. A resolution, adopted by a
majority of the full Board of Directors, may designate from among its members
an executive committee and/or other committee(s) which will have and may
exercise all the authority of the Board of Directors to the extent provided in
such resolution, except as is provided by law. Each committee must have two or
more members who serve at the pleasure of the Board of Directors. The board may,
by resolution adopted by a majority of the full Board of Directors, designate
one or more directors as alternate members of any such committee who may act in
the place and instead of any absent member or members at any meeting of such
committee.
Section 11. Place of Meeting. Special or regular meetings of the Board
of Directors will be held within or without the State of Florida.
Section 12. Notice, Time and Call of Meetings. Regular meetings of the
Board of Directors will be held without notice on such dates as are designated
by the Board of Directors. Written notice of the time and place of special
meetings of the Board of Directors will be given to each director by either
personal delivery, telegram or cablegram at least two (2) days before the
meeting or by notice mailed to the director at least five (5) days before the
meeting.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting will constitute a waiver of notice of such
meeting and waiver of any and all objections to the place of the meeting, the
time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any objection to
the transaction of business because the meeting is not lawfully called or
convened.
Neither the business to be transacted nor the purpose of, regular or
special meetings of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
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<PAGE> 6
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of any such adjourned meeting will be given to the directors who were not
present at the time of the adjournment.
Meetings of the Board of Directors may be called by the Chairman of the
Board, the President of the above named corporation or any two directors.
Members of the Board of Directors may participate in a meeting of such
board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
Section 13. Action Without a Meeting. Any action required to be taken
at a meeting of the Board of Directors, or any action which may be taken at a
meeting of the Board of Directors or a committee thereof, may be taken without a
meeting if a consent in writing, setting forth the action to be so taken, signed
by all the directors, or all the members of the committee, as the case may be,
is filed in the minutes of the proceedings of the board or of the committee.
Such consent will have the same effect as a unanimous vote.
ARTICLE III. OFFICERS
Section 1. Officers. The officers of the above named corporation will
consist of a president, a vice president, a secretary and a treasurer, each of
whom will be elected by the Board of Directors. Such other officers and
assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors from time to time. Any two or more offices
may be held by the same person.
Section 2. Duties. The officers of the above named corporation will
have the following duties:
The President will be the chief executive officer of the above named
corporation, who generally and actively manages the business and affairs of the
above named corporation subject to the directions of the Board of Directors.
Said officer will preside at all meetings of the shareholders and Board of
Directors.
The Vice President will, in the event of the absence or inability of
the President to exercise his office, become acting president of
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the organization with all the rights, privileges and powers as if said person
had been duly elected president.
The Secretary will have custody of, and maintain all of the corporate
records except the financial records. Furthermore, said person will record the
minutes of all meetings of the shareholders and Board of Directors, send all
notices of meetings and perform such other duties as may be prescribed by the
Board of Directors or the President. Furthermore, said officer shall be
responsible for authenticating records of the above named corporation.
The Treasurer shall retain custody of all corporate funds and financial
records, maintain full and accurate accounts of receipts and disbursements and
render accounts thereof at the annual meetings of shareholders and whenever else
required by the Board of Directors or the President, and perform such other
duties as may be prescribed by the Board of Directors or the President.
Section 3. Removal and Resignation of Officers. An officer or agent
elected or appointed by the Board of Directors may be removed by the Board of
Directors whenever in the Board's judgment the best interests of the above named
corporation will be served thereby.
Any officer may resign at any time by delivering notice to the above
named corporation. Said resignation is effective upon delivery unless the
notice specifies a later effective date.
Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV. STOCK CERTIFICATES
Section 1. Issuance. Every holder of share(s) in the above named
corporation will be entitled to have a certificate representing all share(s) to
which he is holder. No certificate representing share(s) will be issued until
such share(s) is/are fully paid.
Section 2. Form. Certificates representing share(s) in the above named
corporation will be signed by the President or Vice President and the Secretary
or an Assistant Secretary and will be sealed with the seal of the above named
corporation.
Section 3. Transfer of Stock. The above named corporation will register
a stock certificate presented for transfer if the certificate is properly
endorsed by the holder of record or by his duly authorized agent.
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Section 4. Lost, Stolen, or Destroyed Certificates. If a shareholder
claims that a stock certificate representing shares issued and recorded by the
above named corporation has been lost or destroyed, a new certificate will be
issued to said shareholder, provided that said shareholder presents an affidavit
claiming the certificate of stock to be lost, stolen or destroyed. At the
discretion of the Board of Directors, said shareholder may be required to
deposit a bond or other indemnity in such amount and with such sureties, if any,
as the board may require.
ARTICLE V. BOOKS AND RECORDS
Section 1. Books and Records. The above named corporation shall keep as
permanent records minutes of all meetings of its shareholders and Board of
Directors, a record of all actions taken by the shareholders or Board of
Directors without a meeting, and a record of all actions taken by a committee of
the Board of Directors in place of the Board of Directors on behalf of the above
named corporation. Furthermore, the above named corporation shall maintain
accurate accounting records. Furthermore, the above named corporation shall
maintain the following:
(i) a record of its shareholders in a form that permits preparation of a list of
the names and addresses of all shareholders in alphabetical order by class of
shares showing the number and series of shares held by each;
(ii) The above named corporation's Articles or Restated Articles of
Incorporation and all amendments thereto currently in effect;
(iii) The above named corporation's Bylaws or Restated Bylaws and all amendments
thereto currently in effect;
(iv) Resolutions adopted by the Board of Directors creating one or more classes
or series of shares and fixing their relative rights, preferences and
limitations if shares issued pursuant to those resolutions are outstanding;
(v) The minutes of all shareholders' meetings and records of all actions taken
by shareholders without a meeting for the past 3 years;
(vi) Written communications to all shareholders generally or all shareholders of
a class or series within the past 3 years including the financial statements
furnished for the past 3 years to shareholders as may be required under Florida
Law;
(vii) A list of the names and business street addresses of the above named
corporation's current directors and officers; and
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(viii) A copy of the above named corporation's most recent annual report
delivered to the Department of State.
Any books, records and minutes may be in written form or in any other
form capable of being converted into written form.
Section 2. Shareholder's Inspection Rights. A shareholder of the above
named corporation (including a beneficial owner whose shares are held in a
voting trust or a nominee on behalf of a beneficial owner) may inspect and copy,
during regular business hours at the above named corporation's principal office,
any of the corporate records required to be kept pursuant to Section 1, of this
Article of these Bylaws, if said shareholder gives the above named corporation
written notice of such demand at least 5 business days before the date on which
the shareholder wishes to inspect and copy. The foregoing right of inspection is
subject however to such other restrictions as are applicable under Florida Law,
including, but not limited to, the inspection of certain records being permitted
only if the demand for inspection is made in good faith and for a proper purpose
(as well as the shareholder describing with reasonable particularity the purpose
and records desired to be inspected and such records are directly connected with
the purpose).
Section 3. Financial Information. Unless modified by resolution of the
shareholders within 120 days of the close of each fiscal year, the above named
corporation shall furnish the shareholders annual financial statements which may
be consolidated or combined statements of the above named corporation and one or
more of its subsidiaries as appropriate, that include a balance sheet as of the
end of the fiscal year, an income statement for that year, and a statement of
cash flow for that year. If financial statements are prepared on the basis of
generally accepted accounting principles, the annual financial statements must
also be prepared on that basis. If the annual financial statements are reported
on by a public accountant, said accountant's report shall accompany said
statements. If said annual financial statements are not reported on by a public
accountant, then the statements shall be accompanied by a statement of the
president or the person responsible for the above named corporation's accounting
records (a) stating his reasonable belief whether the statements were prepared
on the basis of generally accepted accounting principles and if not, describing
the basis of preparation; and (b) describing any
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respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year. The annual
financial statements shall be mailed to each shareholder of the above named
corporation within 120 days after the close of each fiscal year or within such
additional time as is reasonably necessary to enable the above named corporation
to prepare same, if, for reasons beyond the above named corporation's control,
said annual financial statement cannot be prepared within the prescribed period.
Section 4. Other Reports to Shareholders. The above named corporation
shall report any indemnification or advanced expenses to any director, officer,
employee, or agent (for indemnification relating to litigation or threatened
litigation) in writing to the shareholders with or before the notice of the next
shareholders' meeting, or prior to such meeting if the indemnification or
advance occurs after the giving of such notice but prior to the time such
meeting is held, which report shall include a statement specifying the persons
paid, the amounts paid, and the nature and status, at the time of such payment,
of the litigation or threatened litigation.
Additionally, if the corporation issues or authorizes the issuance of
shares for promises to render services in the future, the above named
corporation shall report in writing to the shareholders the number of shares
authorized or issued and the consideration received by the above named
corporation, with or before the notice of the next shareholders' meeting.
ARTICLE VI. DIVIDENDS
The Board of Directors of the above named corporation may, from time to
time declare dividends on its shares in cash, property or its own shares, except
when the above named corporation is insolvent or when the payment thereof would
render the above named corporation insolvent, subject to Florida Law.
ARTICLE VII. CORPORATE SEAL
The Board of Directors will provide a corporate seal which will be in
circular form embossing in nature and stating "Corporate Seal", "Florida", year
of above named incorporation and name of said above named corporation.
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ARTICLE VIII. AMENDMENT
These Bylaws may be altered, amended or repealed, and altered, amended
or new Bylaws may be adopted by a majority vote of the full Board of Directors.
ARTICLE IX. CORPORATE INDEMNIFICATION PLAN
The above named corporation shall indemnify any person:
(1) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by, or in the
right of, the above named corporation) by reason of the fact that he is or was a
director, officer, employee, or agent of the above named corporation or is or
was serving at the request of the above named corporation as a director,
officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against such costs and expenses, and to
the extent and in the manner provided under Florida Law.
(2) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the above
named corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee, or agent of the above named
corporation or is or was serving at the request of the above named corporation
as a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against such costs and expenses, and
to the extent and in the manner provided under Florida Law.
The extent, amount, and eligibility for the indemnification provided
herein will be made by the Board of Directors. Said determinations will be made
by a majority vote to a quorum consisting of directors who were not parties to
such action, suit, or proceeding or by the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such action, suit, or
proceeding.
The above named corporation will have the power to make further
indemnification as provided under Florida Law except to indemnify any person
against gross negligence or willful misconduct.
The above named corporation is further authorized to purchase and
maintain insurance for indemnification of any person as provided herein and to
the extent provided under Florida Law.
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<PAGE> 1
EXHIBIT 3.1
NUMBER PAR VALUE $.001 SHARES
- ---------- -----------------
SPECIMEN SEE RESTRICTIVE LEGEND ****
- ---------- ON REVERSE SIDE -----------------
QORUS.COM, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
COMMON STOCK CUSIP 747280 10 5
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
******
IS THE OWNER OF ******
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK of Qorus.com, Inc.,
transferable only on the books of the Corporation by the holder hereof in
person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated: June 18, 1999
[SEAL]
/s/ PATRICK J. HAYNES, III /s/ ROBERT T. ISHAM, JR.
Chairman Secretary
Countersigned:
Florida Atlantic Stock Transfer, Inc.
7130 Nob Hill Road
Tamarac, Fl 33321 Transfer agent
<PAGE> 2
The following abbreviation, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-------- --------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with right Act
of survivorship and not as --------------------------
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
</TABLE>
For value received, __________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- ---------------------------------------
- --------------------------------------------------------------------------------
Please print of typewrite name and address including postal zip code of assignee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- --------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated
-----------------------------
---------------------------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.
<PAGE> 1
EXHIBIT 6.1
1999 STOCK OPTION PLAN
OF
QORUS.COM, INC.
Section 1.01. Purpose. The purpose of this 1999 Stock Option Plan of
QORUS.COM, INC. (the "Plan") is to promote the growth and general prosperity of
QORUS.COM, INC., a Florida corporation (the "Company"), by permitting the
Company to grant options to purchase shares of the Company's Common Stock
("Shares"). The Plan is designed to help attract and retain superior personnel
for positions of substantial responsibility with the Company and to provide
directors, officers, employees and consultants with an additional incentive to
contribute to the success of the Company. Options granted pursuant to the
provisions of the Plan may be either "incentive stock options," within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or non-statutory stock options, as determined by the Plan
Administrator and set forth in the stock option agreements. Options granted
under this Plan must be labeled either as an "Incentive Stock Option" or a
"Non-Statutory Stock Option." As used in the Plan, the terms "parent
corporation" and "subsidiary corporation" shall have the meanings set forth in
subsections (e) and (f), respectively, of Section 424 of the Code.
Section 2.01. Administration. The Plan will be administered by the
Board of Directors of the Company (the "Board of Directors") or, if the Board
of Directors so determines, by a committee appointed by the Board of Directors
from among its members (such committee administering the Plan being hereinafter
referred to as the "Committee"; and the Board of Directors or the Committee
administering the Plan, as the case may be, being hereinafter referred to as
the "Plan Administrator"). If the Board of Directors designates a Committee to
administer the Plan, the Committee (which may include members of the
compensation committee of the Board of Directors, if any) shall be comprised
solely of not less than two members who shall be (i) "disinterested persons"
within the meaning of Rule 16b-3 (or any successor rule) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (ii)
unless otherwise determined by the Board of Directors, "outside directors"
within the meaning of Section 162(m) of the Code.
Section 2.02. Authority of Plan Administrator. The Plan Administrator
is authorized, subject to the provisions of the Plan, to establish such rules
and regulations as it deems necessary for the proper administration of the Plan
and to make such determinations and interpretations and to take such action in
connection with the Plan and any options granted hereunder as it deems
necessary or advisable. All determinations and interpretations made by the Plan
Administrator shall be binding and conclusive on all participants and their
legal representatives. No member of the Board of the Directors, no member of
the Committee and no employee of the Company shall be liable for any act or
failure to act hereunder, except in circumstances involving his or her bad
faith, gross negligence or willful misconduct, or for any act or failure to act
hereunder by any other member or employee or by any agent to whom duties in
connection with the administration of this Plan have been delegated. In
addition to any other
<PAGE> 2
rights of indemnification as they may have as members of the Board of Directors
or officers or employees of the Company, the Company shall indemnify members of
the Plan Administrator and any agent of the Plan Administrator who is an
employee of the Company, against any and all liabilities or expenses, including
reasonable attorneys' fees, to which they may be subjected by reason of any act
or failure to act with respect to their duties on behalf of the Plan, or any
right granted hereunder, except in circumstances involving such person's bad
faith, gross negligence or willful misconduct.
The Plan Administrator may delegate to one or more of its members, or
to one or more agents, such administrative duties as it may deem advisable, and
the Plan Administrator, or any person to whom it has delegated duties as
aforesaid, may employ one or more persons to render advice with respect to any
responsibility the Plan Administrator or such person may have under the Plan.
The Plan Administrator may employ such legal or other counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion or computation received from any such counsel, consultant or
agent. Expenses incurred by the Plan Administrator in the engagement of such
counsel, consultant or agent shall be paid by the Company, or the subsidiary
whose employees have benefited from the Plan as determined by the Plan
Administrator.
Section 2.03. Terms, Conditions and Method of Grant. The terms and
conditions of options granted under the Plan may differ from one another as the
Plan Administrator, in its absolute discretion, shall determine as long as all
options granted under the Plan satisfy the requirements of the Plan. Whenever
the Plan Administrator shall designate an employee or other individual to
receive an option (the "optionee"), any officer of the Company designated by
the Plan Administrator shall forthwith send notice thereof to the optionee,
stating the number of Shares covered by the option and the price per Share. The
date of notice shall be the date of granting the option to the optionee for all
purposes of the Plan. The notice shall be accompanied by an option agreement
(with a copy of the Plan attached) to be signed by the Company and by the
optionee, which option agreement shall be in the form and shall contain such
provisions consistent with the Plan as the Plan Administrator, acting with the
benefit of legal counsel, shall consider advisable.
Section 3.01. Maximum Number of Shares Subject to the Plan. Subject to
the provisions of Section 13.01(a), the maximum aggregate number of authorized
and unissued Shares that may be optioned and sold under the Plan is Two Million
(2,000,000) Shares. If any of the options granted under the Plan expire or
terminate for any reason before they have been exercised in full, the
unpurchased Shares subject to those expired or terminated options shall again
be available for the purposes of the Plan. Notwithstanding the foregoing, at
any such time as the offer and sale of Shares pursuant to the Plan is subject
to compliance with Section 260.140.45 of Title 10 of the California Code of
Regulations, the total number of Shares issuable upon the exercise of all
outstanding options (together with options outstanding under any other stock
option plan of the Company) and the total number of shares provided for under
any stock bonus or similar plan of the Company shall not exceed thirty percent
(30%) of the then outstanding shares of the Company as calculated in accordance
with the conditions and
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<PAGE> 3
exclusions of Section 260.140.45, unless a higher percentage than thirty
percent (30%) is approved by at least two-thirds of the outstanding shares
entitled to vote.
Section 4.01. Eligibility and Participation. Only employees of the
Company or of any subsidiary corporation or any parent corporation shall be
eligible for selection by the Plan Administrator to receive incentive stock
options and directors, consultants and employees of the Company or of any
subsidiary corporation or any parent corporation shall be eligible to receive
non-statutory stock options.
Section 5.01. Effective Date and Term of Plan. The Plan shall become
effective upon its adoption by the Board of Directors of the Company subject to
the receipt of the approval of the Plan required by Section 16.01. The Plan
shall remain in effect for a term of 10 years, unless sooner terminated under
Section 14.01.
Section 5.02. Duration of Options. Each option and all rights
thereunder granted pursuant to the terms of the Plan shall expire on the date
determined by the Plan Administrator, but in no event shall any option granted
under the Plan expire later than the (10) years from the date on which the
option is granted. In addition, each option shall be subject to early
termination as provided in the Plan.
Section 5.03. Purchase Price. The purchase price for Shares acquired
pursuant to the exercise (in whole or in part) of any incentive stock option
granted under this Plan shall be not less than 100% of the fair market value of
the Shares at the time of the grant. Fair market value shall be determined by
the Plan Administrator on the basis of those factors they deem in good faith to
be appropriate; provided, however, that if at the time the determination is
made the Shares are admitted to trading on a national securities exchange, the
fair market value of the Shares shall be not less than the higher of (a) the
mean between the high bid and asked prices reported for the Shares on that
exchange on the date or most recent trading day preceding the date on which the
option is granted, or (b) the last reported sale price reported for the Shares
on that exchange on the date or most recent trading day preceding the date on
which the option is granted. The phrase "national securities exchange" shall
include the National Association of Securities Dealers Automated Quotation
System and the over-the-counter market, or such other national or regional
securities exchange or market system constituting the primary market for the
Shares.
Section 5.04. Term and Purchase Price of Incentive Stock Option
Granted to More Than 10% Shareholder. Notwithstanding anything to the contrary
in Sections 5.02 and 5.03, (a) if an incentive stock option is to be granted to
an employee of the Company or any subsidiary corporation or parent corporation
who at the time the option is granted owns (or under Section 424(d) of the Code
is deemed to own) more than 10% of the total combined voting power of all
classes of stock of the Company or of any parent corporation or subsidiary
corporation, that option by its terms shall not be exercisable after the
expiration of five (5) years after the date that option is granted, and the
purchase price of the Shares acquired pursuant to the exercise (in whole or in
part) of that option shall be at least 110% of the fair market value (as
determined under Section 5.03 by the Plan Administrator) of the Shares subject
to the option at
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<PAGE> 4
the time the option is granted, and (b) if a non-statutory stock option is to
be granted to an employee, director or consultant of the Company or any
subsidiary corporation or parent corporation who at the time the option is
granted owns more than 10% of the total combined voting power of all classes of
stock of the Company or of any parent corporation or subsidiary corporation,
the purchase price of the Shares acquired pursuant to the exercise (in whole or
in part) of that option shall be at least 110% of the fair market value (as
determined under Section 5.03 by the Plan Administrator) of the Shares subject
to the option at the time the option is granted.
Section 5.05. Maximum Amount of Options. The maximum aggregate fair
market value (determined as of the time the option is granted) of the Shares
with respect to which incentive stock options are exercisable for the first
time by any optionee in any calendar year under all stock option plans of the
Company, or of any parent corporation or subsidiary corporation of the Company,
shall not exceed $100,000. To the extent that the aggregate fair market value
(determined as of the time the option is granted) of the Shares with respect to
which incentive stock options are exercisable for the first time by any
optionee in any calendar year under all stock option plans of the Company or
any parent corporation or subsidiary corporation of the Company exceeds
$100,000, such options shall be treated as non-statutory options.
Section 6.01. Exercise of Options. Subject to Section 6.03, each
option shall be exercisable in one or more installments prior to its expiration
or termination at such times as determined by the Plan Administrator at the
time of grant; provided, however, that no option may be exercisable by a
non-employee director until six (6) months after the date of the grant and,
with the exception of an option granted to an officer, director or consultant,
no option shall become exercisable at a rate of less than twenty percent (20%)
per year over a period of five (5) years from the effective date of grant of
such option, subject to the optionee's continued employment by the Company. The
right to exercise may be cumulative as determined by the Plan Administrator. No
option may be exercised for a fraction of a Share or other than on a business
day of the Company. The full purchase price of any Shares purchased shall be
paid at the time of the exercise of the option in cash or by certified or
cashier's check payable to the order of the Company. The purchase price may
also be paid, at the sole discretion of the Company and as permitted by
applicable law, (i) by delivering Shares already owned by the optionee having a
fair market value (as determined by the Plan Administrator) equal to an amount
not less than the aggregate purchase price of the Shares being purchased, (ii)
by the optionee's promissory note in a form approved by the Company, (iii) by
the assignment of the proceeds of a sale or a loan with respect to some or all
of the Shares being acquired upon the exercise of the option, and (iv) any
combination of the foregoing as determined by the Plan Administrator with
respect to the Option Shares to be purchased.
Unless otherwise provided by the Plan Administrator, an option may not
be exercised by delivery to the Company of the Company's Shares owned by the
optionee unless such Shares either have been owned by the optionee for more
than six (6) months or were not acquired, directly or indirectly, from the
Company.
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<PAGE> 5
Any permitted promissory note shall be on such terms as the Plan
Administrator shall determine at the time the option is granted. The Plan
Administrator shall have the authority to permit or require the optionee to
secure any promissory note used to exercise an option with the Shares acquired
upon the exercise of the option or with other collateral acceptable to the
Company and the amount of the promissory note shall not exceed the exercise
price of the Shares with respect to which the option is being exercised plus
applicable local, state, federal and foreign taxes attributable to such
exercise. Unless otherwise provided by the Board, if the Company at any time is
subject to the regulations promulgated by the Board of Governors of the Federal
Reserve System or any other governmental entity affecting the extension of
credit in connection with the Company's securities, any promissory note shall
comply with such applicable regulations, and the optionee shall pay the unpaid
principal and accrued interest, if any, to the extent necessary to comply with
such applicable regulations.
Section 6.02. Written Notice Required. Any option granted pursuant to
the terms of the Plan shall be considered exercised when written notice of that
exercise, together with the investment representation described in Section
7.01, has been given to the Company at its principal executive office by the
person entitled to exercise the option and full payment for the Shares with
respect to which the option is exercised has been received by the Company.
Section 6.03. Vesting of Non-Statutory Stock Options. Non-statutory
stock options granted to non-employee directors of the Company or any
subsidiary corporation or parent corporation will become exercisable as
follows: 100% three (3) months after the date of the grant.
Section 7.01. Compliance With State and Federal Laws; Delivery of
Shares. No Shares shall be issued with respect to any option granted under the
Plan unless the exercise of that option and the issuance and delivery of the
Shares pursuant to that exercise shall comply with all relevant provisions of
state and federal laws, rules, and regulations, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to that
compliance. If any law, or any regulation of the Securities and Exchange
Commission, or of any other body having jurisdiction, shall require the Company
or the optionee to take any action in connection with the Shares specified in
the optionee's notice, then the date for the delivery of the Shares shall be
postponed until the completion of the necessary action. The Plan Administrator
shall require (to the extent required by or advisable under applicable laws,
rules, and regulations) an optionee to furnish evidence satisfactory to the
Company (including a written and signed representation letter and a consent to
be bound by any transfer restrictions imposed by laws, legend condition, or
otherwise) upon exercise of the option that the Shares to be acquired are being
purchased only for investment and without any present intention to sell or
distribute the Shares in violation of any law, rule, or regulation. Further,
each optionee shall consent to the imposition of a legend on the stock
certificate evidencing the Shares subject to his or her option restricting
their transferability as required by or advisable under applicable laws, rules
and regulations. The Company shall register the Plan and the Stock to be or
already issued under the Plan on Form S-8 with the Securities and Exchange
Commission sixty (60) days following (i) the completion of an initial public
offering of Common Stock, or (ii) the consummation of a merger or consolidation
of the
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<PAGE> 6
Company into or with a company of which there already exists a public market of
such company's common stock, or (iii) the consummation of a merger or
consolidation of the Company into or with a company and a result of such
transaction allows for the trading of Common Stock on a national exchange.
Section 7.02 Transfer Restrictions. Shares issued under the Plan may
be subject to a right of first refusal or other conditions and restrictions as
determined by the Plan Administrator in its sole discretion at the time the
option is granted. Upon request by the Company, each optionee shall execute any
agreement evidencing such transfer restrictions prior to the receipt of Shares
hereunder and shall promptly present to the Company any and all certificates
representing Shares acquired hereunder for the placement on such certificates
of appropriate legends evidencing such transfer restrictions.
Section 8.01. Employment of Optionee. Nothing in the Plan or in any
option granted hereunder shall confer upon any optionee (i) any right to
continued employment by the Company or any parent corporation or subsidiary
corporation, or limit in any way the right of the employer at any time to
terminate or alter the terms of that employment or (ii) any right to sue the
Company, or any parent corporation or subsidiary corporation for any adverse
tax consequences in connection with the grant or exercise of any option or the
disposition of any Shares acquired pursuant to this Plan.
Section 9.01. Option Rights Upon Termination of Employment. If an
optionee ceases to be an employee or a director of the Company or any
subsidiary corporation or parent corporation for any reason other than death or
permanent and total disability (within the meaning of Section 22(e)(3) of the
Code), the optionee's option shall immediately terminate; provided, however,
that the Plan Administrator, in its absolute discretion, may provide at the
time of the grant of an option that the option may be exercised (to the extent
it remains unexercised on the date of termination) at any time within a period
of up to three months following the date of termination, unless either the
option or the Plan otherwise provides for earlier termination but only to the
extent that the optionee is entitled to exercise the option at the date of such
termination. The transfer of an employee from the employ of the Company to any
subsidiary corporation or parent corporation, or vice versa, or from any
subsidiary corporation or parent corporation, to any other subsidiary
corporation or parent corporation shall not be deemed to constitute a cessation
of employment for purposes of this Plan.
Section 10.01. Option Rights Upon Death or Disability. Except as
otherwise limited by the Plan Administrator at the time of the grant of an
option, if an optionee dies or becomes permanently and totally disabled within
the meaning of Section 22(e)(3) of the Code while an employee or a director of
the Company or any subsidiary corporation or parent corporation, or dies within
three months after ceasing to be an employee or director thereof (provided that
the optionee was entitled to exercise the option at the time of ceasing to be
an employee or director), the optionee's option shall expire one year after the
date of death or the date of permanent and total disability, unless either the
option or the Plan otherwise provides for earlier termination. During this one
year (or shorter) period, the option may be exercised, to the extent that it
remains unexercised on the date of death or on the date of permanent and total
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<PAGE> 7
disability, by the optionee, if living, or by the person or persons to whom the
optionee's rights under the option shall pass by will or by the laws of descent
and distribution, but only to the extent that the optionee is entitled to
exercise the option at the date of death or date of permanent and total
disability, as the case may be.
Section 11.01. No Privileges of Ownership. Notwithstanding the
exercise of any option granted pursuant to the Plan, no optionee shall have any
of the rights or privileges of a shareholder of the Company in respect of any
Shares issuable upon the exercise of the option until the optionee becomes a
shareholder of record.
Section 12.01. Options Not Transferable. Options granted pursuant to
the terms of the Plan, may not be sold, pledged, assigned, or transferred in
any manner, other than by will or the laws of descent and distribution, and may
be exercised during the lifetime of an optionee only by that optionee.
Section 13.01. Adjustment to Number and Purchase Price; Acceleration
of Right to Exercise Option; Cancellation of Option. All options granted
pursuant to the Plan shall be adjusted, modified, or canceled in the manner
prescribed by this section.
(a) If the outstanding Shares of the Company are increased, decreased,
changed into, or exchanged for a different number or kind or Shares or
securities through merger, consolidation, combination, exchange of Shares, or
other reorganization, recapitalization, reclassification, stock dividend, stock
split, or reverse stock split, an appropriate and proportionate adjustment
shall be made in the maximum number and kind of Shares as to which options may
be granted under the Plan. A corresponding adjustment changing the number or
kind of Shares allocated to unexercised options or portions thereof that were
granted prior to any such change shall likewise be made. Any adjustments made
pursuant to this Section 13.01 in outstanding options shall be made without
change in the aggregate purchase price applicable to the unexercised portion of
the option, but with a corresponding adjustment in the price for each Share or
other unit of any security covered by the option. With respect to incentive
stock options, the adjustments described in this section 13.01(a) shall be made
in accordance with Section 424 of the Code. The adjustments determined by the
Plan Administrator pursuant to this Section 13.01(a) shall be final, binding
and conclusive.
(b) Notwithstanding any other provision of this Plan, upon a Change of
Control of the Company, the Plan and any option theretofore granted hereunder
shall terminate. For purposes of the Plan, a "Change of Control" shall be
deemed to have occurred upon any of the following events:
(i) following the date hereof, a person or entity or group of
persons or entities, acting in concert, shall become the direct or indirect
beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act) of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the issued and outstanding capital stock of the
Company (a "Significant Owner"), unless such shares are originally issued to
such Significant Owner by the Company;
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<PAGE> 8
(ii) the majority of the Company's Board of Directors is no longer
comprised of (A) the incumbent directors who constitute the Board of Directors
on the date hereof and (B) any other individual(s) who becomes a director
subsequent to the date hereof whose initial election or nomination for election
as a director, as the case may be, was approved by at least a majority of the
directors who comprised the incumbent directors as of the date of such election
or nomination;
(iii) the dissolution or liquidation of the Company;
(iv) the transfer of substantially all of the assets of the Company
to another entity;
(v) the approval by the shareholders of the Company of any
reorganization, merger, or consolidation of the Company with one or more other
entities in which the Company is not the surviving corporation, or which would
result in the occurrence of any event described above in this Section 13.01(b).
In the event of the occurrence of any of the events described in
clauses (i) through (v) above, each optionee (or that person's estate or a
person who acquired the right to exercise the option from the optionee by
bequest or inheritance) shall be entitled, prior to the effective date of the
consummation of any such transaction, to purchase, in whole or in part, the
full number of Shares under the option or options granted to the optionee that
the optionee would otherwise have been entitled to purchase during the
remaining term of the option and without regard to any otherwise applicable
restrictions set forth in the option delaying the immediate exercise of the
option. To the extent that any such exercise relates to stock that is not
otherwise available for purchase through the exercise of the option by the
optionee at that time, the exercise pursuant to this Section 13.01(b) shall be
contingent upon the consummation of the Change in Control.
(c) Notwithstanding the foregoing, in the event of a complete
liquidation of a subsidiary corporation or parent corporation, or in the event
that such corporation ceases to be a subsidiary corporation or parent
corporation, any unexercised options theretofore granted to an employee of such
subsidiary corporation or parent corporation, respectively, shall be deemed
canceled unless the employee shall become employed by the Company or by any
other subsidiary corporation or parent corporation, respectively, on the
occurrence of any such event
Section 14.01. Termination and Amendment of Plan. The Plan shall
terminate ten (10) years from the effective date of the Plan (as determined
under Section 5.01), and no options shall be granted under the Plan after that
date; provided, however, that termination of the Plan shall not terminate any
option granted prior thereto, and options granted prior to termination of the
Plan and existing at the time of termination of the Plan shall continue to be
subject to all the terms and conditions of the Plan as if the Plan had not
terminated. Subject to the limitation contained in Section 14.02, the Plan
Administrator may at any time amend or revise the terms of the Plan (including
the form and substance of the option agreements to be used hereunder), provided
that no amendment or revision shall (a) increase the maximum aggregate number
of Shares provided for in Section 3.01 that may be sold pursuant to options
granted under the Plan except as required under the provisions of Section
13.01(a), (b) permit the granting of an option
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<PAGE> 9
to anyone other than as provided in Section 4.01, (c) increase the maximum term
provided for in Sections 5.02 and 5.04 of any option, or (d) change the minimum
purchase price for the Shares under Sections 5.03 and 5.04, unless approved by
the written consent of the shareholders, or by the affirmative vote, in person
or by proxy, of a majority of the outstanding voting stock of the Company at a
duly held shareholders' meeting.
Section 14.02. Prior Rights and Obligations. No amendment, suspension,
or termination of the Plan shall, without the consent of the optionee, alter or
impair any of that optionee's right or obligations under any option granted
under the Plan prior to that amendment, suspension, or termination.
Section 15.01. Approval of Shareholders. Within 12 months after its
adoption by the Board of Directors of the Company, the Plan must be approved by
the unanimous written consent of the shareholders, or by the affirmative vote,
in person or by proxy, of a majority of the outstanding voting stock of the
Company at a duly held shareholders' meeting. Options may be granted under the
Plan prior to obtaining shareholder approval, but those options shall be
contingent upon shareholder approval being obtained and may not be exercised
prior to the receipt of shareholder approval.
Section 16.01. Reservation of Shares. During the term of the Plan, the
Company will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. In addition, the
Company will from time to time, as is necessary to accomplish the purposes of
the Plan, seek to obtain from any regulatory agency having jurisdiction any
requisite authority in order to grant options under the Plan and to issue and
sell Shares hereunder.
Section 17.01. Tax Withholding. The Company may make such provisions
as it may deem appropriate for the withholding of any state or federal taxes
which the Company determines is advisable to withhold in connection with any
option or any other right, payment or settlement made under this Plan. The
exercise of the option shall not be effective unless such withholding shall
have been effected or obtained in a manner acceptable to the Company,
including, but not limited to, requiring the optionee to remit to the Company
an amount sufficient to satisfy any federal, state and/or local tax withholding
requirements.
Section 18.01. Provision of Information. At least annually, copies of
the Company's financial statements for the just completed fiscal year shall be
made available to each optionee and purchaser of Shares upon the exercise of an
option. The Company shall not be required to provide such information to
persons whose duties in connection with the Company assure them access to
equivalent information.
Section 19.01. Sections-Headings. The headings of the sections of the
Plan are for convenience only and shall not be considered or referred to in
resolving questions of interpretation. References to "Section" that are not
followed by a section number and the phrase "of the Code" are references to
sections of the Plan.
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<PAGE> 10
Section 19.02. Governing Law. The Plan shall be governed by and
construed and interpreted in accordance with the internal laws of the State of
California, except to the extent preempted by federal law, which shall govern
to such extent.
Section 19.03. Invalid Provision. In the event that any provision of
this Plan is found to be invalid or otherwise unenforceable under any
applicable law, such invalidity or unenforceability shall not be construed as
rendering any other provisions contained herein invalid or unenforceable, and
all such other provisions shall be given full force and effect to the same
extent as though the invalid or unenforceable provision was not contained
herein.
Section 19.04. Adoption. The Plan was adopted by a resolution duly
adopted by the Board of Directors of the Company on May 24, 1999. I hereby
certify that the foregoing Plan was duly adopted by the Board of Directors of
QORUS.COM, INC. on May 24, 1999.
Executed this ___ day of May, 1999.
---------------------------------
----------------------,
Secretary
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<PAGE> 1
EXHIBIT 6.2
ACQUISITION AGREEMENT
AGREEMENT (the "Agreement") dated May _, 1999, by, between and among GOLF
BALL WORLD, INC., a company incorporated under the laws of the State of Florida
(hereinafter referred to as "GOLF"); QORUS.COM, INC., a company incorporated
under the laws of the state of Delaware (hereinafter referred to as "QORUS");
and the persons listed on Exhibit "A" attached hereto and made a part hereof,
being all of QORUS's stockholders now and as of the closing date of this
Agreement (hereinafter referred to as the "STOCKHOLDERS"):
WHEREAS, the STOCKHOLDERS own a total of 1,000 shares of common stock,
$.01 par value, of QORUS, said shares being one hundred (100%) percent of the
issued and outstanding common stock of QORUS; and
WHEREAS, the STOCKHOLDERS desire to sell and GOLF desires to purchase one
hundred (100%) percent of such shares;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereby agree as
follows:
1. Purchase and Sale. The STOCKHOLDERS hereby agree to sell, transfer,
assign and convey to GOLF and GOLF hereby agrees to purchase and acquire from
the STOCKHOLDERS, one hundred (100%) percent of all of QORUS's issued and
outstanding common stock (the "QORUS Common Shares"), in a reorganization
pursuant to Section 368 (a)(1)(B) of the Internal Revenue Code.
2. Purchase Price. The aggregate purchase price to be paid by GOLF for the
QORUS Common Shares shall be 8,400,000 (post-reverse split) shares of GOLF
$.001 par value voting common stock, (the "GOLF Common Shares"). The GOLF
Common Shares will be issued to the individual STOCKHOLDERS in accordance with
Exhibit "A-1", which is attached hereto. No fractional shares of GOLF Common
Stock will be issued; in lieu thereof, the number of shares of GOLF Common
Stock to be issued to each Seller will be rounded up to the next whole share.
Each of the STOCKHOLDERS hereby agrees to the terms of this Agreement.
3. Warranties and Representations of QORUS and STOCKHOLDERS. In order to
induce GOLF to enter into this Agreement and to complete the transaction
contemplated hereby, QORUS and STOCKHOLDERS warrant and represent to GOLF as of
the date hereof and as of the Closing that:
(a) Organization and Standing. QORUS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is qualified to do business as a foreign corporation in every state or
jurisdiction in which it operates to the extent required by the laws of such
states and jurisdictions, and has full power and authority to carry on its
business as now conducted and to own and operate its assets, properties and
business. Attached hereto as Exhibit "B" are true and correct copies of QORUS's
Certificate of
<PAGE> 2
Incorporation, amendments thereto and all current By-laws of QORUS. No changes
thereto will be made in any of the Exhibit "B" documents before the Closing.
(b) Capitalization. As of the date hereof, QORUS's entire authorized
equity capital consists of 10,000,000 shares of Common Stock $.01 par value, of
which 1,000 shares of Common Stock are issued and outstanding. As of the Closing
Date, there will be no other voting or equity securities authorized or issued,
nor any authorized or issued securities convertible into voting stock, and no
outstanding subscriptions, warrants, calls, options, rights, commitments or
agreements by which QORUS or the STOCKHOLDERS are bound, calling for the
issuance of any additional shares of common stock or any other voting or equity
security. All of such Colony Common Shares have been duly authorized and validly
issued and are fully paid and nonassessable and were not issued in violation of
any preemptive rights or any applicable securities laws. The 10,000,000 issued
and outstanding QORUS Common Shares constitute one hundred (100%) percent of the
equity capital of QORUS, which includes, inter alia, one hundred (100%) percent
of QORUS's voting power, right to receive dividends, when, as and if declared
and paid, and the right to receive the proceeds of liquidation attributable to
common stock, if any.
(c) Ownership of QORUS Shares. As of the date hereof, the STOCKHOLDERS
are the sole owners of the QORUS Common Shares, free and clear of all liens,
encumbrances, and restrictions whatsoever, except that the QORUS Common Shares
have not been registered under the Securities Act of 1933, as amended (the "'33
Act"), or any applicable State Securities laws. By the transfer of the QORUS
Common Shares to GOLF pursuant to this Agreement, GOLF will thereby acquire
good and marketable title to 100% of the capital stock of QORUS, free and clear
of all liens, encumbrances and restrictions of any nature whatsoever, except by
reason of the fact that the QORUS Common Shares will not have been registered
under the '33 Act, or any applicable State Securities laws.
(d) Taxes. QORUS has filed all federal, state and local income or
other tax returns and reports that it is required to file with all governmental
agencies, wherever situate, and has paid or accrued for payment all taxes as
shown on such returns, such that a failure to file, pay or accrue will not have
a Material Adverse Effect on QORUS. Such returns have been prepared in
accordance with the applicable tax laws and rules and regulations thereunder to
which QORUS is subject and STOCKHOLDERS have delivered true and complete copies
of all such tax returns to GOLF.
(e) Pending Actions. There are no material legal actions, lawsuits,
proceedings or investigations, either administrative or judicial, pending or
threatened, against or affecting QORUS, or against QORUS's Officers or
Directors or the STOCKHOLDERS that arise out of their operation of QORUS,
except as described in Exhibit "C" attached hereto. QORUS is not knowingly in
violation of any law, material ordinance or regulation of any kind whatever,
including, but not limited to laws, rules and regulations governing the sale of
its products and/or services, the '33 Act, the Securities Exchange Act of 1934
(the "'34 Act") as amended, the Rules and Regulations of the U.S. Securities
and Exchange Commission ("SEC"), or the securities laws
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<PAGE> 3
and regulations of any state. Neither QORUS nor STOCKHOLDERS are subject to any
order, writ, judgment, injunction, decree, determination or award of any court,
arbitrator or administrative, governmental or regulatory authority or body.
(f) Governmental Regulation. No approval of any trade or professional
association or agency of government other than as set forth on Exhibit "D" is
required for any of the transactions effected by this Agreement, and the
completion of the transactions contemplated by this Agreement will not, in and
of themselves, affect or jeopardize the validity or continuation of any of
them.
(g) Ownership of Assets. Except as set forth in Exhibit "E", QORUS has
good, marketable title, without any liens or encumbrances of any nature
whatever, to all of the following, if any: its assets, properties and rights of
every type and description, including, without limitation, all cash on hand and
in banks, certificates of deposit, stocks, bonds, and other securities, good
will, customer lists, its corporate name and all variants thereof, trademarks
and trade names, copyrights and interests thereunder, licenses and
registrations, pending licenses and permits and applications therefor,
inventions, processes, know-how, trade secrets, real estate and interests
therein and improvements thereto, machinery, equipment, vehicles, notes and
accounts receivable, fixtures, rights under agreements and leases, franchises,
all rights and claims under insurance policies and other contracts of whatever
nature, rights in funds of whatever nature, books and records and all other
property and rights of every kind and nature owned or held by QORUS as of this
date, and will continue to hold such title on and after the completion of the
transactions contemplated by this Agreement; nor, except in the ordinary course
of its business, has QORUS disposed of any such asset since the date of the
most recent balance sheet described in Section 3(o) of this Agreement.
(h) No Interest in Suppliers, Customers, Landlords or Competitors.
Neither the STOCKHOLDERS nor any member of their families have any interest of
any nature whatever in any supplier, customer, landlord or competitor of QORUS.
(i) No Debt Owed by QORUS to STOCKHOLDERS. Except as set forth in
Exhibit "F", QORUS does not owe any money, securities, or property to either
the STOCKHOLDERS or any member of their families or to any company controlled
by or under common control with such a person, directly or indirectly.
(j) Corporate Records. All of QORUS's books and records, including,
without limitation, its books of account, corporate records, minute book, stock
certificate books and other records of QORUS are up-to-date, complete and
reflect accurately and fairly the conduct of its business in all material
respects since its date of incorporation. All reports, returns and statements
currently required to be filed by QORUS, with respect to the business and
operations of QORUS, with any governmental agency have been filed or valid
extensions have been obtained in accordance with normal procedures and all
governmental reporting requirements have been complied with.
- 3 -
<PAGE> 4
(k) No Misleading Statements or Omissions. Neither this Agreement nor
any financial statement, exhibit, schedule or document attached hereto or
presented to GOLF in connection herewith, contains any materially misleading
statement, or omits any fact or statement necessary to make the other
statements or facts therein set forth not materially misleading.
(1) Validity of the Agreement. All corporate and other proceedings
required to be taken by the STOCKHOLDERS and by QORUS in order to enter into
and to carry out this Agreement have been duly and properly taken. This
Agreement has been duly executed by the STOCKHOLDERS and by QORUS, and
constitutes the valid and binding obligation of each of them, except to the
extent limited by applicable bankruptcy, reorganization, insolvency, moratorium
or other laws relating to or effecting generally the enforcement of creditors
rights. The execution and delivery of this Agreement and the carrying out of
its purposes will not result in the breach of any of the terms or conditions
of, or constitute a default under or violate, QORUS's Certificate of
Incorporation or By-Laws, or any material agreement, lease, mortgage, bond,
indenture, license or other material document or undertaking, oral or written,
to which QORUS or the STOCKHOLDERS is a party or is bound or may be affected,
nor will such execution, delivery and carrying out violate any order, writ,
injunction, decree, law, rule or regulation of any court, regulatory agency or
other governmental body; and the business now conducted by QORUS can continue
to be so conducted after completion of the transaction contemplated hereby,
with QORUS as a wholly-owned subsidiary of GOLF.
(m) Enforceability of the Agreement. When duly executed and delivered,
this Agreement and the Exhibits hereto which are incorporated herein and made a
part hereof are legal, valid, and enforceable by GOLF according to their terms,
except to the extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws relating to or effecting generally the
enforcement of creditors rights, and that at the time of such execution and
delivery, GOLF will have acquired title in and to the QORUS Common Shares free
and clear of all claims, liens and encumbrances.
(n) Access to Books and Records. GOLF will have full and free access
to QORUS's books during the course of this transaction prior to and at the
Closing, during regular business hours.
(o) QORUS Financial Statements. Attached hereto as Exhibit "G-1" are
recent unaudited financial statements of QORUS. Within 60 days after the
Closing, QORUS's audited financial statements will be provided to GOLF, and
will be annexed hereto as Exhibit "G-2"; the QORUS financial statements will
accurately describe QORUS's financial position as of the date thereof, QORUS's
financial statements will have been prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") (or as permitted
by regulation S-X, S-B, and/or the rules promulgated under the U.S. Securities
Act of 1933 and the U.S. Securities Exchange Act of 1934) and will present
fairly in all material respects the financial condition of QORUS as of the
dates thereof and will have been audited by independent certified public
accountants with substantial SEC experience.
- 4 -
<PAGE> 5
(p) QORUS's Corporate Summary. QORUS's Corporate Summary, prepared in
March, 1999 (attached hereto as Exhibit "L") accurately describes QORUS's
business, assets, proposed operations and management as of the date thereof;
since the date of the Corporate Summary, there has been no material adverse
change in the Business Plan and no material adverse change in QORUS of any kind
or nature whatsoever.
(q) No Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with any of
the transactions contemplated by this Agreement.
(r) Compliance with Laws. QORUS represents and warrants that is has
complied with, and is not in violation of any applicable federal, state, or
local statutes, laws or regulations as respects the ownership of its property
or the operation of its business.
(s) Compliance with Laws; Environmental or other Related Matters.
QORUS's operations have been conducted in all material respects in accordance
with all applicable statutes, laws, rules and regulations. QORUS is not in
violation of any Federal, state, local or foreign law, ordinance or regulation
or any Governmental Order applicable to QORUS or by which any of its properties
is subject, bound or affected. There is no Governmental Order outstanding
against QORUS (nor, to the best knowledge of QORUS, threatened to be issued)
that will or would have a Material Adverse Effect. Except as disclosed herein,
QORUS currently holds (and at the Closing will hold) all the environmental,
health and safety and other permits, licenses, authorizations, certificates and
approvals of Governmental Authorities, whether Federal, state, local or foreign
(collectively, "Permits"), necessary or proper for the current use, occupancy
or operation of the Business, and all of the Permits are now and at the Closing
will be in full force and effect.
4. Warranties and Representations of GOLF. In order to induce the
STOCKHOLDERS and QORUS to enter into this Agreement and to complete the
transaction contemplated hereby, GOLF warrants and represents to QORUS and
STOCKHOLDERS that:
(a) Organization and Standing. GOLF is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida,
is qualified to do business as a foreign corporation in every other state in
which it operates to the extent required by the laws of such states, and has
full power and authority to carry on its business as now conducted and to own
and operate its assets, properties and business.
(b) Capitalization. GOLF's entire authorized equity capital consists of
24,000,000 shares of voting common stock, $.0001 par value and 5,000,000 shares
of Preferred Stock, $.0001 par value. There are no shares of Preferred Stock
issued and outstanding. As of the Closing, after giving effect to (a) the
proposed one-for-three reverse split of GOLF's 6,633,000 currently outstanding
shares; (b) the issuance of 8,400,000 restricted post-reverse split shares to
QORUS'S shareholders; (c) the cancellation and return to GOLF's treasury of
258,093
- 5 -
<PAGE> 6
pre-reverse split GOLF shares by Robert E. Hensberry; and (d) the amendment to
GOLF's authorized capital stock to authorize the issuance of 5,000,000 shares
of Preferred Stock $.01 par value and 50,000,000 shares of Common Stock, $.001
par value, GOLF will have 50,000,000 shares of Common Stock, $.001 par value
authorized and 10,525,002 shares of voting common stock, $.001 par value issued
and outstanding and 5,000,000 shares of $.01 par value Preferred Stock
authorized, none which will be issued and outstanding. Upon issuance, all of
the GOLF Common Stock will be validly issued fully paid and non-assessable. The
relative rights and preferences of GOLF's equity securities are set forth on
the Certificate of Incorporation, as amended and GOLF's By-laws (Exhibit "H"
hereto). There are no other voting or equity securities convertible into voting
stock, and no outstanding subscriptions, warrants, calls, options, rights,
commitments or agreements by which GOLF is bound, calling for the issuance of
any additional shares of common stock or preferred stock or any other voting or
equity security. The By-laws of GOLF provide that a simple majority of the
shares voting at a stockholders' meeting at which a quorum is present may elect
all of the directors of GOLF. Cumulative voting is not provided for by the
By-Laws or Certificate of Incorporation of GOLF. Accordingly, as of the Closing
the 8,400,000 restricted shares being issued to and acquired by the
STOCKHOLDERS will constitute 79.81% of the 10,525,002 shares of GOLF which will
then be issued and outstanding, which includes, inter alia, that same
percentage of GOLF's voting power, right to receive dividends, when, as and if
declared and paid, and the right to receive the proceeds of liquidation
attributable to common stock, if any.
(c) Ownership of Shares. By GOLF's issuance of the GOLF Common Shares
to the STOCKHOLDERS pursuant to this Agreement, the STOCKHOLDERS will thereby
acquire good and marketable title thereto, free and clear of all liens,
encumbrances and restrictions of any nature whatsoever, except by reason of the
fact that such GOLF shares will not have been registered under the '33 Act.
(d) Significant Agreements. GOLF is not and will not at Closing be
bound by any of the following other than where already disclosed in any other
exhibit, unless specifically listed in Exhibit "I" hereto:
(i) Employment, advisory or consulting contract;
(ii) Plan providing for employee benefits of any nature;
(iii) Lease with respect to any property or equipment;
(iv) Contract or commitment for any future expenditure in excess
of $1,000;
(v) Contract or commitment pursuant to which it has assumed,
guaranteed, endorsed, or otherwise become liable for any
obligation of any other person, firm or organization;
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<PAGE> 7
(vi) Contract, agreement, understanding, commitment or
arrangement, other than in the normal course of business, not
fully disclosed or set forth in this Agreement;
(vii) Agreement with any person relating to the dividend, purchase
or sale of securities, that has not been settled by the
delivery or payment of securities when due, and which remains
unsettled upon the date of this Agreement.
(e) Taxes. GOLF has filed all federal, state and local income or other
tax returns and reports that it is required to file with all governmental
agencies, wherever situate, and has paid all taxes as shown on such returns
such that a failure to file, pay or accrue will not have a Material Adverse
Effect on GOLF. Such returns have been prepared in accordance with the
applicable tax laws and rules and regulations thereunder to which GOLF is
subject and GOLF will deliver to QORUS true and complete copies of all such
tax returns through the period ended December 31, 1998.
(f) Absence of Liabilities. At and as of the Closing Date and after
giving effect to the sale of all of GOLF's assets to and the assumption of
liabilities by Mr. and Mrs. Hensberry, GOLF will have no liabilities of any
kind or nature, undisclosed fixed or contingent, except for the costs,
including legal and accounting fees and other expenses, in connection with this
transaction, for which GOLF agrees to be responsible and to pay in full at or
before the Closing.
(g) No Pending Actions. There are no material legal actions, lawsuits,
proceedings or investigations, either administrative or judicial, pending or
threatened, against or affecting GOLF, or against any of GOLF's officers or
directors and arising out of their operation of GOLF that are reasonably likely
to have a Material Adverse Effect on American. GOLF is not knowingly in
violation of any law, ordinance or regulation of any kind whatever, including,
but not limited to, the '33 Act, the 1934 Act, as amended, the Rules and
Regulations of the SEC, or the securities laws and regulations of any state.
GOLF is not an investment company as defined in the Securities laws. GOLF is
not required to file reports pursuant to either Section 12(g) or 15(d) of the
'34 Act.
(h) Corporate Records. All of GOLF's books and records, including,
without limitation, its books of account, corporate records, minute book, stock
certificate books and other records are up-to-date, complete and reflect
accurately and fairly the conduct of its business in all material respects
since its date of incorporation; all of said books and records will be
delivered to GOLF's new management at the Closing.
(i) No Misleading Statements or Omissions. Neither this Agreement nor
any financial statement, exhibit, schedule or document attached hereto or
presented to QORUS in
- 7 -
<PAGE> 8
connection herewith contains any materially misleading statement, or omits any
fact or statement necessary to make the other statements or facts therein set
forth not materially misleading.
(j) Validity of the Agreement. All corporate and other proceedings
required to be taken by GOLF in order to enter into and to carry out this
Agreement have been duly and properly taken. This Agreement has been duly
executed by GOLF, and constitutes a valid and binding obligation of GOLF except
to the extent limited by applicable bankruptcy reorganization, insolvency,
moratorium or other laws relating to or effecting generally the enforcement of
creditors rights. The execution and delivery of this Agreement and the carrying
out of its purposes will not result in the breach of any of the terms or
conditions of, or constitute a default under or violate, GOLF's Certificate of
Incorporation or By-Laws, or any material agreement, lease, mortgage, bond,
indenture, license or other document or undertaking, oral or written, to which
GOLF is a party or is bound or may be affected, nor will such execution,
delivery and carrying out violate any order, writ, injunction, decree, law,
rule or regulation of any court, regulatory agency or other governmental body.
(k) Enforceability of the Agreement. When duly executed and delivered,
this Agreement and the Exhibits hereto which are incorporated herein and made a
part hereof are legal, valid, and enforceable by QORUS and the STOCKHOLDERS
according to their terms, except to the extent limited by applicable bankruptcy
reorganization, insolvency, moratorium or other laws relating to or effecting
generally the enforcement of creditors rights; and at the time of such
execution and delivery, the STOCKHOLDERS will have acquired good, marketable
title in and to the GOLF Common Shares acquired pursuant hereto, free and clear
of all liens and encumbrances.
(l) Access to Books and Records. QORUS and STOCKHOLDERS will have full
and free access during regular business hours and on reasonable prior notice to
GOLF's books and records during the course of this transaction prior to and at
the Closing.
(m) GOLF Financial Statements. Upon signing this Agreement, GOLF will
provide QORUS with three years of audited financial statements (through
December 31, 1998), which will be audited in accordance with GAAP by
independent certified public accountants with substantial SEC experience.
(n) GOLF Financial Condition. After consummation of all of the
transactions contemplated whereby GOLF will have no assets or liabilities of
any kind or nature whatsoever.
(o) GOLF Shareholders' List. Immediately upon signing this Agreement,
GOLF will provide QORUS with a current shareholders' list, for GOLF's approval.
GOLF has at least 56 shareholders of record.
(p) Trading Status. GOLF's common stock is now and as of the Closing
will be publicly traded on the OTC Bulletin Board, with the symbol GBLL.
- 8 -
<PAGE> 9
(q) Directors' Approval. Promptly upon the signing of this Agreement,
GOLF'S Board of Directors, by meeting or consent, will authorize the matters
described in section 7(b)(i) herein.
5. Term. All representations, warranties, covenants and agreements made by
any party herein and in the exhibits attached hereto shall survive the
execution and delivery of this Agreement and payment pursuant thereto.
6. The GOLF Shares and QORUS Shares. All of the GOLF and the QORUS Common
Shares shall be validly issued, fully-paid and non-assessable shares of GOLF
and QORUS Common Stock respectively, with full voting rights, dividend rights,
and right to receive the proceeds of liquidation, if any, as set forth in the
respective Articles of Incorporation.
7. Conditions Precedent to Closing. (a) The obligations of QORUS and
STOCKHOLDERS under this Agreement shall be and are subject to fulfillment,
prior to or at the Closing, of each of the following conditions:
(i) That GOLF's representations and warranties contained herein shall
be true and correct at the time of Closing, as if such representations and
warranties were made at such time;
(ii) That GOLF in all material respects shall have performed or
complied with all agreements, terms and conditions required by this Agreement
to be performed or complied with by it prior to or at the time of the Closing;
(iii) That GOLF's directors, by proper and sufficient vote taken
either by consent of directors or at a meeting duly and properly called and
held, shall have properly approved all of the matters described in Section
7(b)(i) herein;
(iv) That GOLF shall have filed the notice of the reverse split
required by Rule l0b-17 under the '34 Act, and shall have prepared a notice to
be sent to its stockholders describing the transactions contemplated herein;
(v) That Robert E. Hensberry shall have returned to GOLF's treasury
258,093 pre-reverse split shares and shall have signed agreements stating that
neither shall publicly sell any of his shares for 90 days after the Closing;
and thereafter they will not sell collectively in any calendar month, more than
20,000 shares without QORUS's prior written consent;
(vi) That GOLF will have sold for $100 all of its existing assets and
business, subject to all of its liabilities to Mr. and Mrs. Hensberry; and
(vii) That GOLF's common stock will be listed for trading on the OTC
Bulletin Board (Symbol: GBLL).
- 9 -
<PAGE> 10
(b) The obligations of GOLF under this Agreement shall be and are
subject to fulfillment, prior to or at the Closing of each of the following
conditions:
(i) That GOLF's Shareholders and Board of Directors, by proper and
sufficient vote, shall have approved this Agreement and the transactions
contemplated hereby; approved the contemplated reverse split of GOLF's
outstanding Common Stock; approved the change of the authorized Preferred Stock
and Common Stock to 5,000,000 ($.01 par value) and 50,000,000 shares, (par
value $.001) respectively; approved the resignation of all of GOLF's current
directors and the election of up to 5 designees of QORUS to serve as directors
in place of GOLF's current directors; approved the sale of all of GOLF's assets
subject to all of its liabilities, in accordance with Section 7(a)(vi) herein;
approved a change of GOLF's corporate name to "QORUS.COM, INC." and will have
approved such other changes as are consistent with this Agreement and approved
by QORUS for submission to GOLF stockholders;
(ii) That QORUS's and STOCKHOLDERS' representations and warranties
contained herein shall be true and correct at the time of Closing as if such
representations and warranties were made at such time and that there shall have
been no Material Adverse Effect with respect to QORUS; and American shall have
received a certificate of QORUS and STOCKHOLDERS to such an effect signed by a
duly authorized officer of QORUS and by each of the STOCKHOLDERS; and
(iii) That QORUS and STOCKHOLDERS shall have performed or complied
with all agreements, terms and conditions required by this Agreement to be
performed or complied with by them prior to or at the time of Closing Date and
GOLF shall have received a Certificate of QORUS and STOCKHOLDERS to such effect
signed by or duly authorized officer of QORUS and by each of the STOCKHOLDERS;
and
(iv) That QORUS's officers will have signed non-compete clauses in
the form attached hereto as Exhibit "J".
8. Termination. This Agreement may be terminated at any time before or
at Closing, by:
(a) The mutual agreement of the parties;
(b) Any party if:
(i) Any provision of this Agreement applicable to a party shall
be materially untrue or fail to be accomplished.
- 10 -
<PAGE> 11
(ii) Any legal proceeding shall have been instituted or shall be
imminently threatening to delay, restrain or prevent the
consummation of this Agreement or any material component
thereof.
Upon termination of this Agreement for any reason, in accordance with the
terms and conditions set forth in this paragraph, each said party shall bear
all costs and expenses as each party has incurred and no party shall be liable
to the other for such costs and expenses.
9. Exhibits. All Exhibits attached hereto are incorporated herein by this
reference as if they were set forth in their entirety.
10. Miscellaneous Provisions. This Agreement is the entire agreement
between the parties in respect of the subject matter hereof, and there are no
other agreements, written or oral, nor may this Agreement be modified except in
writing and executed by all of the parties hereto. The failure to insist upon
strict compliance with any of the terms, covenants or conditions of this
Agreement shall not be deemed a waiver or relinquishment of such right or power
at any other time or times.
11. Closing. The Closing of the transactions contemplated by this
Agreement ("Closing") shall take place at 1:00 P.M. on the first business day
after the latter of the STOCKHOLDERS approving this Agreement or the
shareholders of GOLF approving this Agreement and the matters referred to in
Section 7(b)(i), or such other date as the parties hereto shall agree upon. At
the Closing, all of the documents and items referred to herein shall be
exchanged.
12. No Third Party Beneficiaries. The provisions of this Agreement are for
the exclusive benefit of the parties who are signatories hereto and their
permitted successors and assigns, and no third party shall be a beneficiary of,
or have any rights by virtue of, this Agreement.
13. Assignment; Binding Effect. This Agreement, including both its
obligations and benefits, shall redound to the benefit of, and be binding on
the respective permitted assigns, transferees and successors of the parties.
This Agreement may not be assigned or transferred in whole or in part by either
party without the prior written consent of the other party, which consent shall
not be unreasonably withheld or delayed.
14. Non-Recourse. Notwithstanding anything contained in this Agreement to
the contrary, it is expressly understood and agreed by the parties hereto that
each and every representation, warranty, covenant, undertaking and agreement
made in this Agreement (except with respect to the STOCKHOLDERS) was not made
nor intended to be made as a personal representation, undertaking, warranty,
covenant, or agreement on the part of any incorporator, stockholder, director,
officer, partner, employee or agent, past present or future, or any of them
- 11 -
<PAGE> 12
and any recourse on account of any such representations, warranties, covenants,
undertakings or agreements made in this Agreement, whether in common law, in
equity, by statute or otherwise, against any of them (except with respect to
the STOCKHOLDERS) is hereby forever waived and released.
15. Material Adverse Effect. As used in this Agreement, "Material Adverse
Effect" with respect to a party means any change in, or effect on, the business
conducted by such party that is, or is reasonably likely to be, materially
adverse to (i) the business results of operations, prospects or condition
(financial or otherwise) of such party and its Subsidiaries, taken as a whole,
or (ii) the assets and properties used or useful in the conduct of the business
of such party and its Subsidiaries, taken as a whole.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
17. Counterparts. This Agreement may be executed in duplicate facsimile
counterparts, each of which shall be deemed an original and together shall
constitute one and the same binding Agreement, with one counterpart being
delivered to each party hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as
of the date and year above first written.
GOLF BALL WORLD, INC.
--------------------------------------------
QORUS.COM, INC.
By: /s/ PATRICK J. HAYNES, III
--------------------------------------------
Chairman
--------------------------------------------
STOCKHOLDERS:
(See attached schedule)
-----------------------
-----------------------
-----------------------
-----------------------
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<PAGE> 1
EXHIBIT 6.3
QORUS.COM
May 24, 1999
Mr. Michael D. Sohn
80293 Merion
La Quinta, CA 92253
Re: Employment with Qorus.com, Inc.
Dear Michael:
This letter ("Agreement") will confirm our understanding and
agreement regarding your employment with Qorus.com, Inc., a Delaware
corporation (the "Company"). Your employment will commence on May 24, 1999,
subject to the terms and conditions in this Agreement. This Agreement
completely supersedes and replaces any negotiations, discussions,
understandings or agreements, written or oral, express or implied, you and the
Company have had regarding your employment.
1. Effective upon the commencement of your employment on May 24,
1999, your job title will be Chief Executive Officer, and you will
report to the Board of Directors. Your duties and responsibilities
will be those reasonably required to direct, manage and operate the
business of Qorus.com, including any duties which may be assigned
to you from time to time by the Board of Directors.
2. (a) Your base salary will be Twenty-Five Thousand Dollars
($25,000) per month, less applicable withholdings and
deductions, paid on the Company's regular payroll dates. Your
base salary will be reviewed at the time other management
salaries are reviewed by the Board of Directors, and may be
adjusted (up or down) at the Company's discretion in light of
the Company's performance, your performance, market conditions
and other factors deemed relevant by the Company; provided,
however, that your base salary will not be reduced below the
level stated in this Paragraph 2(a) within the first year of
your employment without your consent.
(b) You will be eligible to receive any discretionary bonus that
may be awarded to you by the Board of Directors from time to
time in its sole discretion. No bonus has been promised to
you, and payment of any bonus shall not create an entitlement
or implied promise of future bonuses.
(c) You shall be entitled to participate in the Company's Stock
Option Plan whereby you will be granted stock options to
purchase 400,000 shares for the option price of $1.00 (one
dollar) per share that are immediately vested. In addition
you will be granted stock options to purchase 100,000 shares
for the option price of $1.00 (one dollar), which shall vest
over three years; 1/6 of the amount each six months. All of
your vested options are non-cancelable
<PAGE> 2
regardless of your employment status and shall have a minimum
term of five years.
3. You will be eligible to participate in the Company's benefits
programs (e.g., health insurance, sick leave, paid holidays, etc.)
on the same basis as other executive-level employees of the
Company, as such programs are established, modified and/or
eliminated by the Company from time to time. No promises have been
made to you concerning the existence of any employee benefits, and
all employee benefits which may be established are subject to
change from time to time in the Company's discretion.
4. You will accrue paid vacation time on a weekly basis, at the rate
of three weeks (fifteen work days) per year. There is a maximum
accrual cap of fifteen days of paid vacation. Once you have accrued
fifteen days of unused paid vacation and reached the accrual cap,
you will not accrue any additional paid vacation until you have
used one or more days of paid vacation.
5. The initial term of this Agreement is approximately one year,
beginning May 24, 1999 and ending May 31, 2000. During the initial
one-year term of your employment, your employment and compensation
may be terminated only for good cause, as defined herein. "Good
cause" means and includes death, disability (unless you remain able
to perform your essential job duties, with or without reasonable
accommodations), commission of any unlawful act in connection with
your employment, commission of a felony or other act of moral
turpitude during your employment (regardless of whether it is
related to the performance of your job duties), voluntary
abandonment of your position, or willful refusal to perform your
job responsibilities. If your employment is terminated by the
Company within the initial one-year term for reasons other than
"good cause" as defined herein, you shall continue to receive your
base salary on the Company's regular payroll dates for the
remainder of the term, as if you continued to be employed for the
full one-year term of this Agreement.
6. After the conclusion of the one-year term described above, this
Agreement and your employment relationship will automatically
terminate without notice. You may resign voluntarily at any time,
and you agree that you will give at least ninety days' advance
notice of your resignation.
7. The Company will reimburse you for documented reasonable and
necessary business expenses incurred by you while engaged in
business activities for the Company's benefit in accordance with
the Company's policies in effect from time to time.
8. You acknowledge that the proprietary information, observations,
data (including without limitation, customer and client lists and
any technical information) obtained while employed or generated by
you concerning the business of the Company or any other affiliate
or subsidiary is confidential ("Confidential Information"), and
therefore, you agree not to disclose to any person unauthorized by
the Company any such Confidential Information during the term of
this Agreement and thereafter. Upon request by the Company, you
agree to turn over all material, written or otherwise, used or
generated in the course of your employment.
9. For one year following termination of your employment, you agree
not to directly or indirectly, whether acting on behalf of yourself
or through some other entity, (a) solicit business from any client
of the Company; and (b) induce or attempt to induce any
-2-
<PAGE> 3
employee of the Company or any of its affiliates or subsidiaries
to leave its/their employ, or in any way interfere with the
relationship between the Company, affiliates or subsidiaries and
employee thereof.
10. As a condition of your employment, you agree that you will abide
by all Company personnel policies and practices, will refrain
from any form of harassment or discrimination, and will cooperate
with other officers, employees, clients, customers and business
associates of the Company in a professional manner, to maximize
the success and stability of the Company. In the event of any
conflicts, the terms of this Agreement will control.
11. This Agreement contains the entire integrated agreement between us
regarding your employment, and no modification or amendment to
this Agreement will be valid unless set forth in writing and
signed by both you and the Chairman of the Board, on behalf of the
Company.
12. To the fullest extent allowed by law, any dispute, controversy or
claim arising out of or relating to this Agreement, the breach
thereof, or any aspect of your employment or the cessation thereof
must be settled exclusively by final and binding arbitration in
Los Angeles County, California, administered by the American
Arbitration Association under its National Rules for the
Resolution of Employment Disputes. Possible disputes covered by
this agreement to arbitrate include ( but are not limited to)
wages, bonus, commission, contract interpretation or enforcement,
discrimination, and other employment-related claims under laws
known as Title VII of the Civil Rights Act, the California Fair
Employment and Housing Act, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, and any other statutes
or laws relating to an employee's relationship with his employer.
However, claims for workers' compensation benefits and
unemployment insurance are not covered by this arbitration
agreement, and such claims may be presented by you to the
appropriate court or state agency as provided by California law.
Judgment upon an award rendered by an arbitrator may be entered in
any court having jurisdiction thereof.
If the terms of this Agreement are acceptable to you, and if you
accept employment with Qorus.com under the terms described herein, please sign,
date and return the enclosed copy of this letter to me.
Very truly yours,
QORUS.COM
By: /s/ PATRICK HAYNES, III
-------------------------------------------
Patrick Haynes, III
Chairman of the Board of Directors of
Qorus.com
ACKNOWLEDGED AND AGREED:
your
/s/ MICHAEL D. SOHN
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Michael D. Sohn
Dated: 5-24-99
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