VOTING AGREEMENT
This VOTING AGREEMENT, dated as of this 15th day of June, 2006
("Agreement"), is by and among ▇▇▇▇▇▇▇ Reverse Merger Fund, LLC, a Delaware
limited liability company ("KRM Fund"), and each of the other persons whose
signature appears under the caption "Shareholders" on the signature page hereof.
For purposes of this Agreement, KRM Fund, and each person whose signature
appears on the signature page hereof shall be referred to herein individually as
"Shareholder" and collectively as the "Shareholders".
WHEREAS, immediately following the Exchange (as defined below), each
Shareholder will own beneficially of record or have the power to vote, or direct
the vote of, shares of common stock, par value $0.001 per share ("Common Stock")
or shares of Series A Convertible Preferred Stock, par value $0.01 per share
("Preferred Stock"), of ▇▇▇▇▇.▇▇▇, Inc. ("Qorus"), a Florida corporation, as set
forth opposite such Shareholder's name on Exhibit A hereto (all such shares of
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Common Stock and Preferred Stock and any shares of which ownership of record or
the power to vote is hereafter acquired by the Shareholders, whether by
purchase, conversion or exercise, prior to the termination of this Agreement
being referred to herein as the "Shares");
WHEREAS, Qorus, VMdirect, L.L.C., a Nevada limited liability company
("VMdirect"), and the Members of VMdirect have entered into an Exchange
Agreement, dated May 23, 2006 (as the same may be amended from time to time)
(the "Exchange Agreement") which provides, upon the terms and subject to the
conditions thereof, for the exchange of all of the Interests of VMdirect for
Qorus' Preferred Shares (the "Exchange");
WHEREAS, Qorus' Preferred Shares are convertible into the Conversion
Shares pursuant to the Certificate of Designations adopted by the filing of the
Articles of Amendment;
WHEREAS, as a condition to the consummation of the Exchange Agreement,
KRM Fund has agreed to enter into this Agreement; and
WHEREAS, the capitalized terms used but not defined in this Agreement
shall have the meanings ascribed to them in the Exchange Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Exchange Agreement, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
VOTING OF SHARES FOR DIRECTORS
SECTION 1.01 Vote in Favor of the Directors. During the period
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commencing on the date hereof and terminating one year thereafter, each
Shareholder, in its capacity as a Shareholder of Qorus (or successor), agrees to
vote (or cause to be voted) all Shares directly or indirectly owned by the
Shareholder or over which the Shareholder has the beneficial ownership or the
right to vote and all Shares which such Shareholder acquires directly or
indirectly or has the beneficial ownership or right to vote in the future, at
any meeting of the Shareholders of
Qorus, and in any action by written consent of the Shareholders of Qorus, in
favor of the election of the Director Designees, as defined herein, to the Board
of Directors of Qorus and will not vote (or cause to be voted) for the removal
of the Director Designees from the Board of Directors. Any Director Designee
may be removed from the Board of Directors in the manner allowed by law and
Qorus' governing documents, but with respect to the Director Designee nominated
by KRM Fund pursuant to Section 1.03 (b), in the event such Director Designee is
removed as a director of Qorus, KRM Fund shall have the right to designate and
nominate such removed director's replacement.
SECTION 1.02 Size of Board of Directors. The Shareholders agree
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that the Board of Directors of Qorus shall consist of three to five persons
during the term hereof, with the actual number to be determined by resolution of
the Board of Directors and to initially equal three (3) members effective as of
the Closing, and the Shareholders will take all such action to set the number of
directors consistent with this section 1.02.
SECTION 1.03 Director Designees. The Director Designees will
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be as follows:
(a) so long as ▇▇▇▇▇ ▇▇▇▇▇▇ ("Ellins") or any successor
entity acting as the record holder of Qorus' securities beneficially owned by
Ellins is a shareholder of Qorus, Ellins, provided, however, that if Ellins
elects, he may designate an additional director in substitution for himself;
(b) so long as Ellins or any successor entity acting as
the record holder of Qorus' securities beneficially owned by Ellins is a
shareholder of Qorus, one person in addition to Ellins (if the number of
directors is three), two persons in addition to Ellins (if the number of
directors is four), and three persons in addition to Ellins (if the number of
directors is five), each designated by Ellins; and
(c) for one person designated by KRM Fund, who is acceptable
to Ellins, which acceptance shall not be unreasonably withheld.
Neither the Shareholders, nor any of the officers, directors,
shareholders, members, managers, partners, employees or agents of any
Shareholder, makes any representation or warranty as to the fitness or
competence of any Director Designee to serve on the Board of Directors by virtue
of such party's execution of this Agreement or by the act of such party in
designating or voting for such Director Designee pursuant to this Agreement.
SECTION 1.04 Term of Agreement. The obligations of the Shareholders
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pursuant to this Article I shall terminate on the first anniversary of the date
of this Agreement.
ARTICLE II
VOTING FOR CORPORATE ACTIONS
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SECTION 2.01 Vote in Favor of Corporate Matters. During the term
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of this Agreement, each Shareholder hereby agrees and covenants to vote or cause
to be voted all of his
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Shares then owned by him, or over which he has voting power, and all Shares
which such Shareholder acquires directly or indirectly or has the beneficial
ownership or right to vote in the future, at any regular or special meeting of
shareholders, or, in lieu of any such meeting promptly following the written
request of any Shareholder, to give his written consent in any action by written
consent of the shareholders, in favor of each of the following items
("Actions"):
(a) To approve a 1 for 50 reverse stock split with special
treatment for certain of Qorus' stockholders to preserve round lot stockholders
("Reverse Split");
(b) To approve the change of the name of Qorus to a name
selected by the Board;
(c) To amend Qorus' Articles of Incorporation to increase
the number of authorized shares of Qorus Common Stock from 50,000,000 shares to
100,000,000 shares;
(d) To reincorporate in the State of Delaware;
(e) To approve the adoption of a stock incentive plan
("Stock Plan") reserving not more than 2,500,000 shares of Qorus Common
Stock for issuance thereunder (on a post-Reverse Split basis), which
number includes outstanding VMdirect Purchase Rights (which are in the form
of options) to be assumed by Qorus (on a post-Reverse Split basis); and
(f) All such other actions as shall be necessary or
desirable in connection with or related to the foregoing actions in (a)
through (e) above including, without limitation, any amendment to the articles
of incorporation of Qorus to effect the foregoing.
SECTION 2.02 Grant of Proxy; Further Assurance. In the event
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that, in connection with any regular or special meeting of shareholders, or, in
lieu of any such meeting, with a written consent in any action by written
consent of the shareholders, within five (5) days following a written request
thereof by Ellins (or a representative thereof), a Shareholder fails to vote or
cause to be voted all of his Shares in favor of the Actions in accordance with
the instructions set forth in such written request, or to execute a written
consent in connection therewith, each Shareholder, by this Agreement, with
respect to all Shares over which it has voting authority and any Shares
hereinafter acquired by such Shareholder over which it may have voting
authority, does hereby irrevocably constitute and appoint Ellins, or any
nominee, with full power of substitution, as his or its true and lawful attorney
and proxy, for and in his or its name, place and stead, to vote each of such
Shares as such Shareholder's proxy, at every annual, special or adjourned
meeting of the shareholders of Qorus (including the right to sign his or its
name (as Shareholder) to any consent, certificate or other document relating to
Qorus that may be permitted or required by applicable law) in favor of the
adoption and approval of each of the Actions. This proxy extends to no other
matter, except for the Actions as enumerated above. Each Shareholder shall
perform such further acts and execute such further documents and instruments as
may reasonably be required to vest in Qorus the power to carry out the
provisions of this Agreement
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SECTION 2.03 Termination. The obligations of each Shareholder
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pursuant to this Article II shall terminate upon the adoption and approval of
the Actions by the shareholders of Qorus.
SECTION 2.04 Obligations as Director and/or Officer. If a
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Shareholder or any of its affiliates or nominees is a member of the board of
directors of Qorus (a "Director") or an officer of Qorus (an "Officer"), nothing
in this Agreement shall be deemed to limit or restrict the Director or Officer
acting in his or her capacity as a Director or Officer of Qorus, as the case may
be, and exercising his or her fiduciary duties and responsibilities, it being
agreed and understood that this Agreement shall apply to Shareholder solely in
his or her capacity as a shareholder of Qorus and shall not apply to his or her
actions, judgments or decisions as a Director or Officer of Qorus.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
COVENANTS OF THE SHAREHOLDERS
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Each Shareholder hereby severally represents, warrants and covenants
to the other Shareholders as follows:
SECTION 3.01 Authorization. Such Shareholder has full legal
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capacity and authority to enter into this Agreement and to carry out such
person's obligations hereunder. This Agreement has been duly executed and
delivered by such Shareholder, and (assuming due authorization, execution and
delivery by the other Shareholders) this Agreement constitutes a legal, valid
and binding obligation of such Shareholder, enforceable against such Shareholder
in accordance with its terms.
SECTION 3.02 No Conflict; Required Filings and Consents.
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(a) The execution and delivery of this Agreement by
such Shareholder does not, and the performance of this Agreement by such
Shareholder will not, (i) conflict with or violate any Legal Requirement
applicable to such Shareholder or by which any property or asset of such
Shareholder is bound or affected, or (ii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of any encumbrance on
any property or asset of such Shareholder, including, without limitation, the
Shares, pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation.
(b) The execution and delivery of this Agreement by such
Shareholder does not, and the performance of this Agreement by such Shareholder
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or materially delay the
performance by such Shareholder of such Shareholder's obligations under this
Agreement.
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SECTION 3.03 Litigation. There is no private or governmental
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action, suit, proceeding, claim, arbitration or investigation pending before any
agency, court or tribunal, foreign or domestic, or, to the knowledge of such
Shareholder or any of such Shareholder's affiliates, threatened against such
Shareholder or any of such Shareholder's affiliates or any of their respective
properties or any of their respective officers or directors, in the case of a
corporate entity (in their capacities as such) that, individually or in the
aggregate, would reasonably be expected to materially delay or impair such
Shareholder's ability to consummate the actions contemplated by this Agreement.
There is no judgment, decree or order against such Shareholder or any of such
Shareholder's affiliates, or, to the knowledge of such Shareholder of any of
such Shareholder's affiliates, any of their respective directors or officers, in
the case of a corporate entity (in their capacities as such), that would
prevent, enjoin, alter or materially delay any of the actions contemplated by
this Agreement, or that would reasonably be expected to have a material adverse
effect on such Shareholder's ability to consummate the actions contemplated by
this Agreement.
SECTION 3.04 Title to Shares. Such Shareholder is the legal
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and beneficial owner of its Shares free and clear of all Liens.
SECTION 3.05 Absence of Claims. Each Shareholder has no knowledge
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of any causes of action or other claims that could have been or in the future
might be asserted by the Shareholder against Qorus or any of its predecessors,
successors, assigns, directors, employees, agents or representatives arising out
of facts or circumstances occurring at any time on or prior to the date hereof
and in any way relating to any duty or obligation of Qorus or any Shareholder.
ARTICLE IV
GENERAL PROVISIONS
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SECTION 4.01 Notices. All notices and other communications given
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or made pursuant hereto shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by overnight
courier service, by telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other addresses as shall be specified by notice given in
accordance with this Section 4.01):
(a) If to any Shareholder (other than KRM Fund):
▇▇▇▇▇ ▇▇▇▇▇▇
VMdirect, L.L.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ telecopy
with a copy to:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Markiles, LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ telephone
(▇▇▇) ▇▇▇-▇▇▇▇ telecopy
(b) If to KRM Fund:
▇▇▇▇▇▇▇ Reverse Merger Fund, LLC
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Manager
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ telephone
(▇▇▇) ▇▇▇-▇▇▇▇ telecopy
SECTION 4.02 Headings. The headings contained in this Agreement
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are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 4.03 Severability. If any term or other provision of
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this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 4.04 Entire Agreement. This Agreement constitutes the
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entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof. This Agreement may not be amended or
modified except in an instrument in writing signed by, or on behalf of, the
parties hereto.
SECTION 4.05 Specific Performance. The parties hereto agree that
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irreparable damage would occur in the event that any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 4.06 Governing Law. This Agreement shall be governed by,
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and construed in accordance with, the laws of the State of Florida applicable to
contracts executed in and to be performed in that State.
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SECTION 4.07 Disputes. All actions and proceedings arising out of
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or relating to this Agreement shall be heard and determined exclusively in any
state or federal court in Los Angeles County, California.
SECTION 4.08 No Waiver. No failure or delay by any party in
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exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 4.09 Counterparts. This Agreement may be executed in one
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or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 4.10 Waiver of Jury Trial. Each of the parties hereto
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irrevocably and unconditionally waives all right to trial by jury in any action,
proceeding or counterclaim (whether based in contract, tort or otherwise)
arising out of or relating to this Agreement or the Actions of the parties
hereto in the negotiation, administration, performance and enforcement thereof.
SECTION 4.11 Exchange Agreement. All references to the Exchange
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Agreement herein shall be to such agreement as may be amended by the parties
thereto from time to time.
[Signature page(s) follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SHAREHOLDERS:
▇▇▇▇▇▇▇ REVERSE MERGER FUND, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Manager
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Individually
/s/ ▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇ ▇▇▇▇▇, Individually
The ▇▇▇▇▇▇▇ ▇▇▇▇ Family Trust
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, Trustee
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇, Individually
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EXHIBIT A
SHAREHOLDERS
Name of Shareholder Number of Shares Owned Number of
Beneficially and of Record (1) Options/Warrants
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▇▇▇▇▇▇▇ Reverse Merger Fund LLC 34,983,459 Common Stock 0
▇▇▇▇▇ ▇▇▇▇▇▇ 202,588 Series A Preferred (2) 0
▇▇▇ ▇▇▇▇▇ 202,588 Series A Preferred (2) 0
The ▇▇▇▇▇▇▇ ▇▇▇▇ Family Trust 395,397 Series A Preferred (2) 0
▇▇▇▇▇▇▇ ▇▇▇▇ 41,674 Series A Preferred (2) 0
(1) Prior to giving effect to the Reverse Split
(2) Each share of Series A Preferred Stock is convertible into 1,042.340735
shares of Qorus' common stock (prior to giving effect to the Reverse Split),
with preferred stockholders voting with common stockholders on an as converted
basis.
