CUSIP No. 74725 H 10 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1) /1
QCS.net Corporation
- -------------------------------------------------------------------------------
(formerly QCS Corporation)
(Name of Issuer)
Common Stock, Par Value 0.001 Per Share
- -------------------------------------------------------------------------------
(Title of Class of Securities)
74725 H 10 1
- -------------------------------------------------------------------------------
(CUSIP Number)
Ed Mathias
c/o The Carlyle Group
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington D. C. 20004
(202) 347-2626
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
- -------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement /2)
- -------------------------------------------------------------------------------
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b) (3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
- --------
1/ This Amendment No. 1 to Schedule 13D amends the Schedule D filed on behalf of
Reporting Persons on June 27, 1995.
2/ This Amendment No. 1 to Schedule 13D relates to the acquisition of capital
stock of the Issuer by Reporting Persons on August 29, 1997 and September 1,
1998 and is being filed merely to update the Schedule 13 D filed on behalf of
Reporting Persons on June 27, 1995 as to their aggregate incremental holding
of the Issuer's capital stock. See Item 4 herein.
<PAGE>
CUSIP No. 74725 H 10 1
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Carlyle-QCS Partners, L.P.
IRS # 52-1899559
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 /1
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0 Shares
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 3,151,999 Shares /2
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0 Shares
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,151,999 Shares /2
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,151,999 Shares /2
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.0% /3
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
1/ 1,456,311 shares acquired in connection with Reset; 239,377 shares acquired
as result of Dividend Recapitalization. In both cases, no funds given in
exchange for the shares. (See Item 3).
2/ Including 1,695,688 shares of Common Stock receivable upon conversion of
1,695,688 shares of Convertible Preferred Stock. Carlyle-QCS has no beneficial
interest in the 145,631 shares receivable from the Company upon exercise of
certain warrant rights under a Class W Warrant issued to TC Group, L.L.C. (See
Items 4, 5 and 7).
<PAGE>
3/ Percentages calculated based on 24,249,991 shares which equals 19,230,750
shares of Common Stock reported as issued and outstanding on the Company's
latest Form 10-QSB and 5,019,241 shares of Convertible Preferred Stock issued
and outstanding subsequent to the Dividend Recapitalization according to that
certain Letter dated July 23, 1998 from the Company to the holders of
Convertible Preferred Stock plus the shares that will be issued upon
conversion of the Convertible Preferred Stock and shares that will be issued
upon exercise of the Reporting Persons' rights to purchase stock from the
Company. (See Item 5(a)).
<PAGE>
CUSIP No. 74725 H 10 1
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
TC Group, L.L.C.
IRS # 54-1686957
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 /1
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0 Shares
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 3,297,630 Shares /2
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0 Shares
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,297,630 Shares /2
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,297,630 Shares /2
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.6% /2
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
00 (Limited Liability Company)
______________
1/ 1,456,311 shares acquired in connection with Reset; 239,377 shares acquired
as result of Dividend Recapitalization. In both cases, no funds given in
exchange for the shares. (See Item 3).
2/ Including (i) the 1,695,688 shares receivable upon conversion of 1,695,688
shares of Convertible Preferred Stock; and (ii) the 145,631 shares receivable
from the Company upon exercise of certain warrant rights under a Class W
Warrant. (See Items 4, 5 and 7).
3/ Percentages calculated based on 24,249,991 shares which equals 19,230,750
shares reported as issued and outstanding on the Company's latest Form 10-QSB
and 5,019,241 shares of Convertible Preferred Stock issued and outstanding
subsequent to the Dividend Recapitalization according to that certain Letter
dated July 23, 1998 from the Company to the holders of Convertible Preferred
Stock plus the shares that will be issued upon conversion of the Convertible
Preferred Stock and shares that will be issued upon exercise of the Reporting
Persons' rights to purchase stock from the Company. (See Item 5(a)).
<PAGE>
CUSIP No. 74725 H 10 1
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
TCG Holdings, L.L.C.
IRS # 54-1686011
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 /1
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0 Shares
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 3,297,630 Shares /2
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0 Shares
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,297,630 Shares /2
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,297,630 Shares /2
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.6% /3
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
00 (Limited Liability Company)
______________
1/ 1,456,311 shares acquired in connection with Reset; 239,377 shares acquired
as result of Dividend Recapitalization. In both cases, no funds given in
exchange for the shares. (See Item 3).
2/ Including (i) the 1,695,688 shares receivable upon conversion of 1,695,688
shares of Convertible Preferred Stock; and (ii) the 145,631 shares receivable
from the Company upon exercise of certain warrant rights under a Class W
Warrant. (See Items 4, 5 and 7).
3/ Percentages calculated based on 24,249,991 shares which equals 19,230,750
shares reported as issued and outstanding on the Company's latest Form 10-QSB
and 5,019,241 shares of Convertible Preferred Stock issued and outstanding
subsequent to the Dividend Recapitalization according to that certain Letter
dated July 23, 1998 from the Company to the holders of Convertible Preferred
Stock plus the shares that will be issued upon conversion of the Convertible
Preferred Stock and shares that will be issued upon exercise of the Reporting
Persons' rights to purchase stock from the Company. (See Item 5(a)).
<PAGE>
CUSIP No. 74725 H 10 1
Item 1. Security and Issuer
The title of the class of equity securities to which this
Amendment No.1 to Schedule 13D relates is the Common Stock, par value $.001 per
share (the "Common Stock"), of QCS.net Corporation, a Delaware corporation
(formerly QCS Corporation) (the "Company"). The address of the Company is 650
Castro Street, Suite 210, Mountain View, CA 94041.
Item 2. Identity and Background
(a) - (c), (f) The names of the persons filing this Amendment
No.1 to Schedule 13D are (i) Carlyle-QCS Partners, L.P., a Delaware limited
partnership ("Carlyle-QCS"); (ii) TC Group, L.L.C., a Delaware limited liability
company ("TC Group"); and (iii) TCG Holdings, L.L.C., a Delaware limited
liability company ("TCG"; and collectively with Carlyle-QCS and TC Group
referred to herein as the "Reporting Persons").
TC Group is the sole general partner of Carlyle-QCS.
TCG is a member of TC Group and holds a controlling interest
in TC Group. The names of the managing members of TCG, their business address,
citizenship, and principal occupation are as follows:
Name and Office Held Business Address Citizenship
- --------------------- ---------------- -----------
James A. Baker, III c/o The Carlyle Group, 1001 USA
Managing Director Pennsylvania Avenue, N.W.
Suite 220, Washington, D.C.
20004-2505
Frank C. Carlucci c/o The Carlyle Group, 1001 USA
Managing Director Pennsylvania Avenue, N.W.
Suite 220, Washington, D.C.
20004-2505
William E. Conway, Jr. c/o The Carlyle Group, 1001 USA
Managing Director Pennsylvania Avenue, N.W.
Suite 220, Washington, D.C.
20004-2505
Daniel A. D'Aniello c/o The Carlyle Group, 1001 USA
Managing Director Pennsylvania Avenue, N.W.
Suite 220, Washington, D.C.
20004-2505
<PAGE>
CUSIP No. 74725 H 10 1
Richard G. Darman c/o The Carlyle Group, 1001 USA
Managing Director Pennsylvania Avenue, N.W.
Suite 220, Washington, D.C.
20004-2505
Allan M. Holt c/o The Carlyle Group, 1001 USA
Managing Director Pennsylvania Avenue, N.W.
Suite 220, Washington, D.C.
20004-2505
Jerome H. Powell c/o The Carlyle Group, 1001 USA
Managing Director Pennsylvania Avenue, N.W.
Suite 220, Washington, D.C.
20004-2505
David M. Rubenstein c/o The Carlyle Group, 1001 USA
Managing Director Pennsylvania Avenue, N.W.
Suite 220, Washington, D.C.
20004-2505
Frank D. Yeary c/o The Carlyle Group, 1001 USA
Managing Director Pennsylvania Avenue, N.W.
Suite 220, Washington, D.C.
20004-2505
The principal business of Carlyle-QCS is to invest in the
securities of the Company. The principal business of TC Group and TCG is
merchant banking.
The principal business address of Carlyle-QCS, TC Group and
TCG is c/o The Carlyle Group, 1001 Pennsylvania Avenue N.W., Suite 220 South,
Washington D.C. 20004.
(d) and (e). During the last five years, none of the Reporting
Persons has (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration
The Reset
Pursuant to that certain Series A Convertible Stock Purchase
Agreement dated as of November 22, 1994 (the "Stock Purchase Agreement") by and
among the Company, Carlyle-QCS and a syndicate of purchasers led by Mr. Yves
<PAGE>
CUSIP No. 74725 H 10 1
Sisteron (the "Sisteron Group") (attached to the Schedule 13D filed on behalf of
Reporting Persons on June 27, 1995 (the "Original Schedule 13D") as Exhibit 2),
Carlyle-QCS contracted to purchase an aggregate of 1,456,311 shares of the
Company's authorized Series A Convertible Preferred Stock, par value $.001 per
share (the "Convertible Preferred Stock"), from the Company. Pursuant to the
Stock Purchase Agreement and that certain Shareholders Agreement dated as of
November 22, 1994 (the "Shareholders Agreement") by and among the Company,
Carlyle-QCS and Sisteron Group (attached to the Original Schedule 13D as Exhibit
3), the purchase price paid by Carlyle-QCS for the Convertible Preferred Stock
could be reduced in the event QCS Development Company, SA, the Company's
subsidiary (the "Subsidiary"), realized a net income during the fiscal year 1996
equal to forty percent (40%) or less of its projected net income for the fiscal
year 1996, as set forth in the Company's Information Memorandum dated July,
1994. Such reduction would take the form of, a cash payment, or, at the
Company's option, issuance of additional shares of Common Stock, or a
combination of both to Carlyle-QCS and the other holders of Convertible
Preferred Stock (the "Reset"). Such payment would be made by the Company, which
would be reimbursed by Marcel van Heesewijk and Mattheus Wegbrans (the
"Founders").
In that certain Founders Agreement, dated June 17, 1996
("Founders Agreement"), by and among the Founders, the Company, Reinhardt Stille
and Leonardus Klijn, and various Purchasers (the "Purchasers"), the Founders
acknowledged that the net income milestones for the Subsidiary for the fiscal
year 1996 would not occur. The Founders therefore agreed to transfer or pay the
Purchasers, including Carlyle-QCS, an aggregate of 4,368,937 shares of Common
Stock (the "Reset Shares") or the equivalent in cash, based on a value of $1.03
per share, or a combination of shares and cash; such transfer or payment to be
made to the Purchasers pro-rata based on their holdings of Convertible Preferred
Stock. The Founders agreed to make such transfer or payment on or before August
1, 1997.
The Founders placed the Reset Shares in escrow pursuant to
that certain Escrow Agreement dated June 17, 1996 by and among the Founders, the
Purchasers, and Cooley Godward Castro Huddleson & Tatum (the "Escrow Agent"). By
letter dated February 13, 1997, Carlyle-QCS confirmed with the Company its
desire to receive its pro rata share of the Reset Shares, its equivalent in
cash, or a combination of both. By letter dated July 29, 1997, Carlyle-QCS
instructed the Escrow Agent to deliver and remit to Carlyle-QCS 1,456,311 shares
of Common Stock, which represented Carlyle-QCS's pro-rata share of the Reset
Shares. Accordingly, on August 29, 1997, Carlyle-QCS received 1,456,311 shares
of Common Stock.
The Dividend Recapitalization
Under the terms of the Certificate of Incorporation of the
Company, as amended, the Company must pay cash dividends on the Convertible
Preferred Stock at the rate of 5% per annum. By June, 1998, Carlyle-QCS and the
other holders of Convertible Preferred Stock had an accrued and delinquent cash
dividend owed to them by the Company. On June 17, 1998, the Company sent a
letter (the "Consent Letter") to all holders of Convertible Preferred Stock that
proposed a dividend recapitalization (the "Dividend Recapitalization") whereby
the cash dividend on the Convertible Preferred Stock would be eliminated as well
as all rights to receive the accrued
<PAGE>
CUSIP No. 74725 H 10 1
and delinquent cash dividend for periods up to and including June 30, 1998 (the
"Closing Date"). In exchange for the cash dividend and the right to receive the
accrued and delinquent cash dividend, the holders of the Convertible Preferred
Stock would be issued, on a pro rata basis, shares of Convertible Preferred
Stock. The number of shares that each holder of Convertible Preferred Stock
would receive would be calculated by dividing (a) the accrued divided as of the
Closing Date by (b) $1.2069, which represents 66 2/3% of the average of the bid
and ask prices of the Company's Common Stock for the twenty (20) days prior to
the Closing Date as reported on the Over-the-Counter Bulletin Board reporting
system. The Dividend Recapitalization was conditioned upon the approval by the
holders of 80% or more of the Convertible Preferred Stock on or before the
Closing Date. By letter dated July 23, 1998 from the Company to the holders of
Convertible Preferred Stock (the "Confirmation Letter"), the Company confirmed
that it had received on or prior to the Closing Date executed copies of the
Consent Letter from holders of 80% or more of the Convertible Preferred Stock.
Accordingly, the Company carried out the Dividend Recapitalization. Based on the
calculation in the Consent Letter, on September 1, 1998, Carlyle-QCS received
239,377 shares of Convertible Preferred Stock in accordance with the Dividend
Recapitalization.
Item 4. Purpose of Transaction
The Reset was contemplated in the Stock Purchase Agreement and
was consummated as a reduction in the purchase price paid by Carlyle-QCS for the
1,456,311 shares of Convertible Preferred Stock acquired by Carlyle-QCS pursuant
to the Stock Purchase Agreement. The Dividend Recapitalization was consummated
by the Reporting Persons at the request of the Company and was an exchange for
the cash dividend on the Convertible Preferred Stock and the right to receive
the accrued and delinquent cash dividend.
Each Reporting Person may, subject to the continuing
evaluation of the factors discussed herein, acquire from time to time additional
shares of the Common Stock or other securities of the Company in the open market
or in privately negotiated transactions, by exchange offer or otherwise.
Depending on the factors discussed herein, each Reporting Person may, from time
to time, retain or sell all or a portion of its holdings of the shares of the
Common Stock in the open market or in privately negotiated transactions. Any
actions that any Reporting Person might undertake will be dependent upon such
person's review of numerous factors, including, among other things, the
availability of shares of the Common Stock for purchase and the price levels of
such shares; general market and economic conditions; ongoing evaluation of the
Company's business operations and prospects; the relative attractiveness of
alternative business and investment opportunities; the actions of the management
and the Board of Directors of the Company (the "Board"); and other future
developments.
Although the foregoing reflects activities presently
contemplated by each Reporting Person with respect to the Company, the foregoing
is subject to change at any time.
The Reporting Persons have no present plans or proposals which
relate to or would result in: (i) the acquisition by any person of additional
securities of the Company, or the disposition of securities of the Company; (ii)
an extraordinary corporate transaction, such as a
<PAGE>
CUSIP No. 74725 H 10 1
merger, reorganization or liquidation, involving the Company or any of its
subsidiaries; (iii) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (iv) any change in the present Board or
management of the Company, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the Board; (v) any
material change in the present capitalization or dividend policy of the Company;
(vi) any other material change in the Company's business or corporate structure;
(vii) changes in the Company's certificate of incorporation or by-laws or other
actions which may impede the acquisition of control of the Company by any
persons; (viii) causing a class of securities of the Company to be delisted from
a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(ix) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or (x) any action similar to those enumerated
above.
This Amendment No.1 to Schedule 13D is being filed as an
amendment to the Original Schedule 13D. Although this Amendment No. 1 to
Schedule 13D was required to be filed promptly after the acquisition of capital
stock on August 29, 1997 pursuant to the Reset, at no time since the filing of
the Original Schedule 13D on June 27, 1995 have any of the Reporting Persons'
purposes and intentions in owning and holding the capital stock of the Company
changed in any way. Moreover, no Reporting Person has acquired in an open market
transaction or disposed in any type of transaction any of the capital stock of
the Company during the relevant time period. Rather, the filing of this
Amendment No. 1 to Schedule 13D is required merely because of the accretion of
the Reporting Persons' holdings of the Company's capital stock pursuant to the
Reset (which was contemplated and described in the initial investment documents
filed on June 27, 1995 with the Original Schedule 13D) and the Dividend
Recapitalization (which was agreed to by Reporting Persons at the request of
Company management).
<PAGE>
CUSIP No. 74725 H 10 1
Item 5. Interest in Securities of the Issuer
(a) Shares of Common Stock Beneficially Owned
<TABLE>
<CAPTION>
Right to Common
Stock Upon Right to
Common Conversion of Purchase
Stock Convertible Common Stock Total
Beneficially Preferred from the Beneficial
Owned Stock Company Ownership
----- ----- -------- ----------
<S> <C> <C> <C> <C>
Carlyle-QCS 1,456,311 1,695,688 N.A. 3,151,999
TC Group 1,456,311 1,695,688 145,631 3,297,630
TCG 1,456,311 1,695,688 145,631 3,297,630
Reporting 1,456,311 1,695,688 145,631 3,297,630
Persons
</TABLE>
<PAGE>
CUSIP No. 74725 H 10 1
Approximate Percentage of Common Stock of the Company Beneficially Owned.1
<TABLE>
<CAPTION>
Common Stock
and
Convertible Preferred Right to Purchase Total Beneficial
Stock from the Company Ownership
----- ----------------- ---------
<S> <C> <C> <C>
Carlyle-QCS 13.0% N.A. 13.0%
TC Group 13.0% .60% 13.6%
TCG 13.0% .60% 13.6%
Reporting Persons 13.0% .60% 13.6%
</TABLE>
1. Including (i) the 1,456,311 shares of Common Stock; (ii) the 1,695,688 shares
receivable upon conversion of 1,695,688 shares of Convertible Preferred
Stock; and (iii) the 145,631 shares receivable from the Company upon exercise
of the Class W Warrant. (See Items 4, 5 and 7).
------------------------
(b) Carlyle-QCS may be deemed to share with the other Reporting Persons
the power to vote and dispose of (i) 1,456,311 shares of Common Stock and (ii)
1,695,688 shares of Convertible Preferred Stock. Carlyle-QCS has no power to
vote or dispose of 145,631 shares of Common Stock pursuant to the Class W
Warrant held by TC Group. TC Group may be deemed to share with the other
Reporting Persons the power to vote and dispose of (i) 1,456,311 shares of
Common Stock and (ii) 1,695,688 shares of Convertible Preferred Stock. TC Group
may be deemed to share with TCG the power to vote and dispose of 145,631 shares
of Common Stock as the holder of the Class W Warrant. TCG, as a member holding a
controlling interest in TC Group, may be deemed to share all rights herein
described belonging to TC Group.
(c) Other than the transactions described herein, no transactions in
any capital stock of the Company have occurred since the filing of the Original
Schedule 13D on June 27, 1995.
(d) No person other than the Reporting Persons is known to the
Reporting Persons to have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares of
Common Stock of the Company owned by the Reporting Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
Pursuant to the Founders Agreement, Carlyle-QCS received
1,456,311 shares of Common Stock as a partial refund of the purchase price of
the 1,456,311 shares of Convertible Preferred Stock purchased by Carlyle-QCS
pursuant to the Stock Purchase Agreement.
<PAGE>
CUSIP No. 74725 H 10 1
Pursuant to the Consent Letter and the Confirmation Letter,
Carlyle-QCS received 239,377 shares of Convertible Preferred Stock as a result
of the Dividend Recapitalization. The Consent Letter and the Confirmation Letter
also eliminated the cash dividend on the Convertible Preferred Stock as well as
the right to receive the accrued and delinquent cash dividend for periods up to
and including June 30, 1998.
Item 7. Materials to be filed as Exhibits
Exhibit 1. Joint Filing Agreement by and among Carlyle-QCS, TC Group
and TCG, dated January 15, 1999.
Exhibit 2. Founders Agreement dated June 17, 1996 by and among the Founders,
the Company, Reinhardt Stille and Leonardus Klijn, and the
Purchasers.
Exhibit 3. Escrow Agreement dated June 17, 1996 by and among the Founders,
the Purchasers, and the Escrow Agent.
Exhibit 4. Letter dated February 13, 1997 from Carlyle-QCS to the Company.
Exhibit 5. Letter dated July 29, 1997 from the Company to the Escrow Agent.
Exhibit 6. Letter dated June 17, 1998 from the Company to the holders of
Convertible Preferred Stock.
Exhibit 7. Letter dated July 23, 1998 from the Company to the holders of
Convertible Preferred Stock.
<PAGE>
CUSIP No. 74725 H 10 1
Signature
After reasonable inquiry and to the best of the knowledge of the undersigned on
page 14 hereof, such undersigned certify that the information set forth in this
statement is true, complete and correct.
January 15, 1999
Date
<PAGE>
CUSIP No. 74725 H 10 1
IN WITNESS WHEREOF, Carlyle-QCS, TC Group and TCG have caused this
Amendment No. 1 to Schedule 13D to be executed as of the date first above
written.
CARLYLE-QCS PARTNERS, L.P.
By: TC Group, L.L.C., its General Partner
By: /s/ David M. Rubenstein
----------------------------
Name: David M. Rubenstein
Title: Managing Director
TC GROUP, L.L.C.
By: /s/ David M. Rubenstein
-----------------------------
Name: David M. Rubenstein
Title: Managing Director
TCG HOLDINGS, L.L.C.
By: /s/ David M. Rubenstein
---------------------------
Name: David M. Rubenstein
Title: Managing Director
<PAGE>
CUSIP No. 74725 H 10 1
Index to Exhibits
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Exhibit 1. Joint Filing Agreement by and among Carlyle-QCS, TC Group and 20
TCG, dated January 15, 1999.
Exhibit 2. Founders Agreement dated June 17, 1996 by and among the 21
Founders, the Company, Reinhardt Stille and Leonardus Klijn, and
the Purchasers.
Exhibit 3. Escrow Agreement dated June 17, 1996 by and among the 27
Founders, the Purchasers, and the Escrow Agent.
Exhibit 4. Letter dated February 13, 1997 from Carlyle-QCS to the Company. 39
Exhibit 5. Letter dated July 29, 1997 from the Company to the Escrow Agent. 41
Exhibit 6. Letter dated June 17, 1998 from the Company to the holders of 42
Convertible Preferred Stock.
Exhibit 7. Letter dated July 23, 1998 from the Company to the holders of 44
Convertible Preferred Stock.
</TABLE>
Exhibit 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) promulgated under the Securities
Exchange Act of 1934, as amended, the undersigned hereby agree to the joint
filing with all other Reporting Persons (as such term is defined in the
Amendment No. 1 to Schedule 13D referred to below) on behalf of each of them of
a statement on the Amendment No. 1 to Schedule 13D (including amendments
thereto) with respect to the common stock, par value $.001 per share, of QCS
Corporation, a Delaware corporation, and that this Agreement may be included as
an Exhibit to such joint filing. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, Carlyle-QCS, TC Group and TCG have caused
this Agreement to be executed as of the 15th day of January, 1999.
CARLYLE-QCS PARTNERS, L.P.
By: TC Group, L.L.C., its General Partner
By: /s/ David M. Rubenstein
---------------------------
Name: David M. Rubenstein
Title: Managing Director
TC GROUP, L.L.C.
By: /s/ David M. Rubenstein
---------------------------
Name: David M. Rubenstein
Title: Managing Director
TCG HOLDINGS, L.L.C.
By: /s/ David M. Rubenstein
---------------------------
Name: David M. Rubenstein
Title: Managing Director
Exhibit 2
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of May __,
1996, by and among MARCEL VAN HEESEWIJK, MATTHEUS WEGBRANS (collectively, the
"Founders"), QCS CORPORATION, a Delaware corporation (the "Company"), REINHARDT
STILLE and LEONARDUS KLIJN, and THE PERSONS LISTED AS "PURCHASERS" ON THE
SIGNATURE PAGES HERETO (the "Purchasers").
WHEREAS, Section 4(f) of that certain Shareholders' Agreement
dated as of November 22, 1994 (the "Shareholders' Agreement"), and Section
2.4(d) of that certain Series A Convertible Preferred Stock Purchase Agreement
dated November 22, 1994 (the "Purchase Agreement"), require the Company to
transfer additional shares of Common Stock or, at the option of the Company, pay
their equivalent value in cash (at certain agreed upon values), to the
Purchasers, if certain financial results described therein (the "Financial
Results") are not achieved;
WHEREAS, if the Company shall become obligated to transfer
shares of Common Stock or, at its option, pay their equivalent value in cash to
the Purchasers, then pursuant to Section 4(f) of the Shareholders' Agreement,
the Founders shall become obligated to pay to the Company shares of Common
Stock, or, at the option of the Founders, cash, as more fully described in said
Section 4(f); and
WHEREAS, it appears that the Financial Results will not be
achieved;
WHEREAS, in consideration for, among other things, the
Founders acknowledging that the Financial Results will not be achieved and for
the Founders agreeing to the following, the parties hereto desire to delete
Sections 4(e) and 4(f) of the Shareholders' Agreement and Section 2.4(d) of the
Purchase Agreement, and to make certain other deletions and amendments to the
Shareholders' Agreement and Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties agree
as follows:
1. The Founders acknowledge that the Financial Results will
not be achieved.
2. Subject to the provisions contained in the last sentence of
this Section 2, the Founders agree to transfer or pay to the Purchasers an
aggregate of four million three hundred sixty eight thousand nine hundred thirty
seven (4,368,937) shares of the Company's Common Stock (the "Shares") or, at the
option of the Founders, their equivalent in cash based on a value of one Dollar
and three Cents ($1.03) per share, or a combination of both shares of Common
Stock and cash in the equivalent aggregate amount, such transfer or payment to
be made to the Purchasers pro-rata to their respective holdings of Series A
Preferred on the Closing (as defined in the Purchase Agreement). The Founders
shall make such transfer or payment to the Purchasers on, or at the option of
the
1
<PAGE>
Founders before, August 1, 1997. Unless otherwise agreed to by all of the
Purchasers, the form of payment to each Purchaser shall be the same as the form
of payment to all other Purchasers (e.g., if one Purchaser is paid 80% in cash
and 20% in shares of Common Stock, all Purchasers shall be paid 80% in cash and
20% in shares of Common Stock). No Founder shall be obligated to make any
transfer or payment pursuant to this Agreement in excess of the amount
determined by multiplying the amount of such transfer or payment by a fraction,
the numerator of which is the number of shares of the Company's Common Stock
owned by such Founder on the date of this Agreement (assuming that any
outstanding options and warrants to purchase shares of the Company's Common Sock
held by such Founder have been exercised), and the denominator of which is the
number of shares of the Company's Common Stock owned by both Founders on the
date of this Agreement (assuming that any outstanding options and warrants to
purchase shares of the Company's Common Stock held by such Founders have been
exercised).
3. Concurrently with the execution of this Agreement by all parties
hereto, the Founders shall deposit the Shares into escrow to be held pursuant to
the terms and conditions contained in that certain Escrow Agreement of even date
attached hereto as Exhibit A.
4. The Purchasers agree to accept the transfer or payment described in
Section 2 hereof in full satisfaction of any obligations owed to the Purchasers
by the Company or the Founders pursuant to Sections 4(e) or 4(f) of the
Shareholders' Agreement or Section 2.4(d) of the Purchase Agreement.
5. This Agreement shall become effective on the date on which it has
been executed and delivered by all parties hereto and all of the following
agreements have been executed and delivered by all parties thereto, and shall
not become effective unless and until all such parties have so executed and
delivered such agreements: (a) the Amendment No. 1 to Series A Convertible
Preferred Stock Purchase Agreement attached hereto as Exhibit B; (b) the Amended
and Restated Shareholders' Agreement of even date attached hereto as Exhibit C;
and (c) the Amended and Restated Class U Warrant attached hereto as Exhibit D.
6. This Agreement and the legal relationship between the parties hereto
shall be governed by and construed in accordance with the internal laws of the
State of New York exclusively, without regard to conflicts of law principles.
7. This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Agreement by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
2
<PAGE>
QCS CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Marcel van Heesewijk
-----------------------------------
Mattheus Wegbrans
-----------------------------------
Reinhardt Stille
-----------------------------------
Leonardus Klijn
-----------------------------------
3
<PAGE>
PURCHASERS
CARLYLE QCS PARTNERS, L.P.
By: /s/ David M. Rubeinstein
-------------------------------
Name:
-----------------------------
Title:
----------------------------
STF MANAGEMENT LIMITED, as General
Partner of Sharp Technology Fund I Limited
Partnership
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
STF MANAGEMENT LIMITED, as General
Partner of Sharp Technology Fund II Limited
Partnership
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
LAGUNITAS PARTNERS, L.P.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
4
<PAGE>
PROACTIVE PARTNERS, L.P.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
OAKWOOD HOLDINGS, BVI
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
DE NOYANGE S.A.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
CANNEL CAPITAL MANAGEMENT
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Mr. Herb Miller
-----------------------------------
Robert Zangrillo
-----------------------------------
5
<PAGE>
Mr Hans Robben
-----------------------------------
Mr. Peter Mills
-----------------------------------
Mr. Peter Anson
-----------------------------------
Mr. Steven Lebow
-----------------------------------
6
Exhibit 3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, made and entered into this ___ day of
June, 1996, by, between and among Marcel Van Heesewijk, an individual having his
principal office for the transaction of business at 650 Castro Street, Suite
210, Mountain View, California (hereinafter called "Heesewijk"), Mattheus
Wegbrans, an individual having his principal office for the transaction of
business at QCS Development Company S.A., Immeuble Le Quadra, 455 Promenade Des
Anglais, 06200, Nice, France (hereinafter called "Wegbrans"; collectively with
Heesewijk, the "Founders"), the persons listed as "Purchasers" on the signature
pages hereto (the "Purchasers"), and Cooley Godward Castro Huddleson & Tatum,
Five Palo Alto Square, 3000 El Camino Real, Palo Alto, California (hereinafter
called the "Escrow Agent").
W I T N E S S E T H:
Whereas, Section 4(f) of that certain Shareholders' Agreement
dated as of November 22, 1994 (the "Shareholders' Agreement"), and Section
2.4(d) of that certain Series A Convertible Preferred Stock Purchase Agreement
dated November 22, 1994 (the "Purchase Agreement"), require QCS Corporation, a
Delaware corporation (the "Company") to transfer additional shares of its common
stock (the "Common Stock") or, at the option of the Company, to pay the
equivalent value of such shares of Common Stock in cash (at certain agreed upon
values), to the Purchasers if certain financial results described therein (the
"Financial Results") are not achieved; and
Whereas, in consideration for, among other things, the
Founders agreeing (i) to transfer to the Purchasers an aggregate of Four Million
Three Hundred Sixty-Eight Thousand Nine Hundred Thirty-Seven (4,368,937) shares
of the Common Stock or (ii) at the option of the Founders, to pay the equivalent
value of such shares of the Common Stock in cash based on a value of One Dollar
and Three Cents ($1.03) per share or (iii) to transfer or pay a combination of
both shares of the Common Stock and cash in the equivalent aggregate amount on
or before August 1, 1997, the Founders, the Purchasers and the Company entered
into an agreement dated June ___, 1996 (the "Founders Agreement"), wherein such
parties agreed to delete Sections 4(e) and 4(f) of the Shareholders' Agreement
and Section 2.4(d) of the Purchase Agreement, and to make certain other
deletions and amendments to the Shareholders' Agreement and Purchase Agreement;
and
Whereas, in accordance with the provisions of the Founders
Agreement, the Founders, the Purchasers, and the Escrow Agent have agreed to
enter into this Escrow Agreement and the Founders have agreed to deposit an
aggregate of Four Million Three Hundred Sixty-Eight Thousand Nine Hundred
Thirty-Seven (4,368,937) shares of the Common Stock, which have fully vested
(the "Escrowed Shares"), with the Escrow Agent to be held by said Escrow Agent
pursuant to the terms hereof; and
1
<PAGE>
Whereas, the percentage of Escrowed Shares to be transferred
by each of Heesewijk and Wegbrans shall be determined in accordance with Section
2 of the Founders Agreement; and
Whereas, the parties hereto intend to set forth herein their
agreement as to this matter.
Now, Therefore, in consideration of these premises, the mutual
promises of the parties and other good and valuable consideration, the receipt
and sufficiency of which are hereby mutually acknowledged, it is hereby
covenanted and agreed by and among the parties hereto as follows:
1. Escrow Agent. The law firm of Cooley Godward Castro
Huddleson & Tatum agrees to act as Escrow Agent hereunder, and the Purchasers,
Heesewijk and Wegbrans agree that the Escrow Agent shall so act and perform
under the terms and conditions of this Escrow Agreement.
2. Possession of Shares. The Escrow Agent hereby acknowledges
that it has received from Heesewijk 3,021,037 shares of Common Stock and from
Wegbrans 1,347,900 shares of Common Stock, which in the aggregate represent Four
Million Three Hundred Sixty-Eight Thousand Nine Hundred Thirty-Seven (4,368,937)
shares of Common Stock, which will be held by the Escrow Agent pursuant to the
terms and conditions described in this Escrow Agreement. Such Escrowed Shares
and/or cash shall be paid over and delivered to Purchasers, or their designees,
on or before August 1, 1997, in satisfaction of the obligations of Heesewijk and
Wegbrans to Purchasers as set forth in the Founders Agreement. The Escrow Agent
hereby acknowledges to Purchasers that the Escrowed Shares held by it are
impressed with a trust in favor of Purchasers.
3. Voting of Common Stock. Unless the Common Stock is
distributed to Purchasers pursuant to Section 4 hereof, Heesewijk and Wegbrans
will retain all voting rights and all other incidents of ownership to the
respective shares of Common Stock deposited by each of them pursuant to the
terms herein, and the Escrow Agent assumes no obligation with respect to voting
any shares of the Common Stock.
4. Distribution. Before August 1, 1997, all of the Escrowed
Shares shall be released and remitted to Purchasers, or their designees, in
accordance with Section 2 of the Founders Agreement, upon delivery to the Escrow
Agent of instructions substantially in the form of Exhibit A hereto, signed by
Heesewijk and Wegbrans. On or after August 1, 1997, that number of Escrowed
Shares that any Purchaser is entitled to receive pursuant to Section 2 of the
Founders Agreement shall be released and remitted to such Purchaser, or its
designee, upon delivery to the Escrow Agent of instructions in the form of
Exhibit B hereto, signed by such Purchaser. If any shares of Common Stock remain
with the Escrow Agent on the Termination Date (as hereinafter defined), the
Escrow Agent shall return such shares to Heesewijk and Wegbrans, as the case may
be, upon the delivery of instructions
2
<PAGE>
substantially in the form of Exhibit C hereto, signed by all Purchasers. In the
event of any distribution of Escrowed Shares to a Purchaser, the Escrow Agent
shall not be responsible for effecting a transfer of such shares on the books
and records of the Corporation. Heesewijk and Wegbrans, by their execution
hereof, irrevocably instruct the transfer agent of the Company to accept the
instructions of the Escrow Agent with respect to any changes in the
denominations of share certificates registered in the name of Heesewijk or
Wegbrans, without further instruction or documentation.
5. Instructions. All instructions to the Escrow Agent
hereunder must be in writing and signed by the party or parties delivering such
instructions.
6. Good Faith. The Escrow Agent shall not be liable for any
action it may take or fail to take as Escrow Agent, including without
limitation, any action it may take or fail to take in reliance upon the
instructions specified in Section 5 hereof, if its conduct is in good faith and
in the exercise of its own best judgment or upon the advice of counsel to the
Escrow Agent. Subject to the foregoing, Heesewijk and Wegbrans do hereby
covenant and agree to indemnify and hold the Escrow Agent harmless from any and
all claims and demands whatsoever which may be asserted against it in connection
with its action as Escrow Agent hereunder, including reasonable attorneys' fees.
7. Advice and/or Instruction. If the Escrow Agent is in doubt
as to any of its rights, duties or obligations hereunder at any time and from
time to time, it may request the written advice and/or instruction of
Purchasers, Heesewijk and Wegbrans, and the advice and/or instruction given in
writing and signed by Purchasers, Heesewijk and Wegbrans may be fully relied
upon by the Escrow Agent. In the event that the Escrow Agent seeks such advice
and/or instruction from the parties, but fails to receive the same from all of
the parties, it may forbear on any action under this Escrow Agreement until such
advice and/or instruction is received by all of the parties, or in the
alternative until an order is received from a court of competent jurisdiction.
The Escrow Agent shall take no action upon the instruction of Heesewijk or
Wegbrans without first notifying Purchasers of its intention with respect
thereto and may also defer taking any action upon the instruction of any
Purchaser until after it has provided notice of its intention to such other
parties as it desires.
8. Resignation and Substitution. The Escrow Agent may resign
as Escrow Agent upon ten days' written notice to Heesewijk and Wegbrans,
provided, however, that prior to the effectiveness of such resignation, the
Escrow Agent shall in good faith attempt to appoint a successor Escrow Agent,
which shall be another law firm, commercial banking institution, or other
institution that customarily acts in such capacity.
9. Acknowledgment as to Representation. Heesewijk and Wegbrans
hereby acknowledge that the Escrow Agent is legal counsel to the Company, and
does not represent either of Heesewijk or Wegbrans as legal counsel.
3
<PAGE>
10. Binding Effect. This Escrow Agreement shall be binding
upon and inure to the benefit of the parties and the Escrow Agent and their
respective heirs, successors and assigns.
11. Entire Agreement. This Escrow Agreement constitutes the
entire understanding and agreement between the parties with regard to the
subject matter hereof. This Escrow Agreement may be amended at any time by
written statement executed by all parties hereto. No modification or amendment
of this Escrow Agreement shall be valid unless it is in writing and executed by
all parties hereto. Any conflict between this Escrow Agreement and the Founders
Agreement shall be resolved in favor of the former.
12. Termination. This Agreement shall terminate upon the
earlier to occur of (i) the date on which the obligations of Heesewijk and
Wegbrans described in the Founders Agreement have been satisfied or (ii) the
distribution of all of the Escrowed Shares pursuant to Section 4 hereof or (iii)
the resignation of the Escrow Agent pursuant to Section 8 hereof, if, after a
good faith attempt to appoint a successor escrow agent pursuant to Section 8 no
successor has been so appointed (the "Termination Date"). Except as otherwise
provided in the preceding sentence, Purchasers, Heesewijk and Wegbrans shall not
be entitled to terminate this Agreement.
13. acknowledgment by purchasers. Purchasers acknowledge that
Founders and any Purchaser may reach an agreement prior to August 1, 1997, with
respect to the distribution to such Purchaser of a number of the Escrowed Shares
and/or cash that such Purchaser is entitled to receive pursuant to Section 2 of
the Founders Agreement. If such an agreement has been reached by a Purchaser and
Founders, then Escrow Agent shall release and remit that number of Escrowed
Shares as directed by, and upon the delivery of, written instructions signed by
such Purchaser and Founders, which in no event shall be more than the number of
Escrowed Shares that such Purchaser is entitled to receive pursuant to Section 2
of the Founders Agreement and which in no event shall modify the rights of other
Purchasers hereunder.
14. Law Venue. This Agreement and its validity, construction
and performance shall be governed in all respects by the laws of the State of
California. Jurisdiction of any lawsuit under this Escrow Agreement shall be
limited to the Federal District Courts for all disputes arising hereunder.
15. Compensation. The Escrow Agent shall be compensated
hereunder by Heesewijk and Wegbrans.
16. Notice and Directions. All notices and instructions
provided for in this Agreement and any requests for directions to be made by the
Escrow Agent hereunder, shall be made to the parties at the address opposite
their names on the signature pages hereto.
4
<PAGE>
In Witness Whereof, the parties have hereunto set their hands
on the day first above written.
ADDRESSES:
/s/ Marcel van Heesewijk 650 Castro Street, Suite 210
- -------------------------------- Mountain View, CA 94041
Marcel van Heesewijk
/s/ Mattheus Wegbrans c/o QCS Development Company S.A.
- -------------------------------- Immeuble Le Quadra
Mattheus Wegbrans 455 Promenade Des Anglais
006200
Nice, France
COOLEY GODWARD CASTRO HUDDLESON Attn: Robert L. Jones, Esq.
& TATUM Five Palo Alto Square
3000 El Camino Real
By: /s/ Robert L. Jones Palo Alto, CA 94306-2155
--------------------------------
Name:
--------------------------------
Title:
-------------------------------
PURCHASERS:
CARLYLE QCS PARTNERS, L.P. Attn: Edward Mathias
1001 Pennsylvania Ave., N.W.
Suite 480 North
By: Washington, D.C. 20004
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
STF MANAGEMENT LIMITED, as General Address:
Partner of Sharp Technology Fund I Limited
Partnership
By: /s/ Lindsay C.N. Bury
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
5
<PAGE>
STF MANAGEMENT LIMITED, as General Address:
Partner of Sharp Technology Fund II Limited
Partnership
By: /s/ Lindsay C.N. Bury
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
LAGUNITAS PARTNERS, L.P. Address:
By: /s/ John D. Gruber
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
PROACTIVE PARTNERS, L.P. Address:
By: /s/ Charles C. McGettigan
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
OAKWOOD HOLDINGS, BVI Address:
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
DE NOYANGE S.A. Address:
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
6
<PAGE>
CANNELL CAPITAL MANAGEMENT Address:
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Mr. Herb Miller Address:
/s/ Herb Miller
---------------------------------------
Mr. Robert Zangrillo Address:
---------------------------------------
Mr. Hans Robben Address:
---------------------------------------
Mr. Peter Mills Address:
---------------------------------------
Mr. Peter Anson Address:
---------------------------------------
Mr. Steven Lebow Address:
---------------------------------------
7
<PAGE>
EXHIBIT A
[Date]
Cooley Godward Castro Huddleson & Tatum
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 10019-5874
Ladies and Gentlemen:
Reference is made to the Escrow Agreement, dated June __, 1996, by and
between Marcel van Heesewijk ("Heesewijk"), Mattheus Wegbrans ("Wegbrans"), the
Persons listed as "Purchasers" on the signature pages thereto (the
"Purchasers"), and yourself, pursuant to which the certificates representing
Four Million Three Hundred Sixty-Eight Thousand Nine Hundred Thirty-Seven
(4,368,937) shares of the common stock of QCS Corporation ("QCS") were deposited
with you to constitute the Escrowed Shares (as such term is defined in the
Escrow Agreement) in accordance with the Escrow Agreement.
Pursuant to Section 4 of the Escrow Agreement, we hereby instruct you
to immediately deliver and remit to Purchasers or their designees the
certificates representing _____ Escrowed Shares to be distributed to such
Purchasers in accordance with Section 2 of the Founders Agreement.
Sincerely yours,
-----------------------------
Marcel van Heesewijk
-----------------------------
Mattheus Wegbrans
A-1
<PAGE>
EXHIBIT B
[Date]
Cooley Godward Castro Huddleson & Tatum
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 10019-5874
Ladies and Gentlemen:
Reference is made to the Escrow Agreement, dated June __, 1996, by and
between Marcel van Heesewijk ("Heesewijk"), Mattheus Wegbrans ("Wegbrans"), the
Persons listed as "Purchasers" on the signature pages thereto (the "Purchasers")
and yourself, pursuant to which the certificates representing Four Million Three
Hundred Sixty-Eight Thousand Nine Hundred Thirty-Seven (4,368,937) shares of the
common stock of QCS Corporation ("QCS") were deposited with you to constitute
the Escrowed Shares (as such term is defined in the Escrow Agreement) in
accordance with the Escrow Agreement.
Pursuant to Section 4 of the Escrow Agreement, we hereby instruct you
to immediately deliver and remit to [Purchaser or its designee] the certificates
representing _____ Escrowed Shares, which constitute the number of Escrowed
Shares that [Purchaser] is entitled to receive pursuant to Section 2 of the
Founders Agreement.
Sincerely yours,
[Purchaser]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
B-1
<PAGE>
EXHIBIT C
[Date]
Cooley Godward Castro Huddleson & Tatum
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 10019-5874
Ladies and Gentlemen:
Reference is made to the Escrow Agreement, dated June __, 1996, by and
between Marcel van Heesewijk ("Heesewijk"), Mattheus Wegbrans ("Wegbrans"), the
Persons listed as "Purchasers" on the signature pages thereto (the
"Purchasers"), and yourself, pursuant to which the certificates representing
Four Million Three Hundred Sixty-Eight Thousand Nine Hundred Thirty-Seven
(4,368,937) shares of the common stock of QCS Corporation ("QCS") were deposited
with you to constitute the Escrowed Shares (as such term is defined in the
Escrow Agreement) in accordance with the Escrow Agreement.
Because the Escrow Agreement has terminated in accordance with Section
12 therein, we hereby instruct you to immediately deliver and remit to Heesewijk
and Wegbrans the certificates representing _____ Escrowed Shares, pursuant to
Section 4 of the Escrow Agreement.
Sincerely yours,
CARLYLE QCS PARTNERS, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
STF MANAGEMENT LIMITED, as General
Partner of Sharp Technology Fund I Limited
Partnership
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
C-1
<PAGE>
STF MANAGEMENT LIMITED, as General
Partner of Sharp Technology Fund II Limited
Partnership
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
LAGUNITAS PARTNERS, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PROACTIVE PARTNERS, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
OAKWOOD HOLDINGS, BVI
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
DE NOYANGE S.A.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
C-2
<PAGE>
CANNELL CAPITAL MANAGEMENT
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Mr. Herb Miller
--------------------------------
Mr. Robert Zangrillo
--------------------------------
Mr. Hans Robben
-------------------------------
Mr. Peter Mills
-------------------------------
Mr. Peter Anson
-------------------------------
Mr. Steven Lebow
-------------------------------
C-3
Exhibit 4
THE CARLYLE GROUP
1001 Pennsylvania Ave., N.W.
Washington, D.C. 20004-2505
(202) 347-2626
(202) 347-1818 (Fax)
February 13, 1997
Marcel van Heesewijk
c/o QCS Corporation
650 Castro Street
Mountain View, CA 94041
The Wegbrans
c/o QCS SA
455 Promenade des Anglais
06200 Nice, France
copy to:
Cooley, Godward, Castro, Huddleston & Tatum
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attn: Robert L. Jones, Esquire
Dear Sirs:
We are in receipt of your letter dated January 21, 1997
offering to settle your obligations to the Series A investors by delivering
one-third of the escrowed common stock, in lieu of delivering, on a pro-rata
basis on or before August 1, 1997, either (i) 4,368,937 shares of QCS common
stock, (ii) the cash equivalent of such shares based on a per share valuation of
$1.03, or (iii) a combination of shares and cash at your option.
After reviewing your letter and the agreements to which it
refers, we have decided not to accept the above referenced offer.
Hence, as satisfaction for our pro-rata share of your
obligations, on or before August 1, 1997, the undersigned expects to receive:
(i) 1,456,311 shares of QCS common stock; or
(ii) $1,500,000.33; or
<PAGE>
(iii) Some pro-rata combination of (i) and (ii) above.
We expect that 1,456,311 shares of QCS common stock will remain in escrow with
Cooley, Godward, Castro, Huddleston and Tatum pursuant to the June 1996 escrow
agreement until such time as your obligations to us have been satisfactorily
discharged.
Finally, from reviewing your January 21st letter, we
understand that you may attempt to arrange a private sale of QCS common stock in
order to raise capital to fulfill your obligations to the Series A investors. We
currently have no objection to such action, subject, of course, to any and all
registration and/or other contractual rights of the undersigned contained in
QCS's corporate documents and any and all contractual arrangements among
yourselves, QCS and/or the undersigned.
Sincerely,
CARYLE QCS PARTNERS, L.P.
By: /s/ David M. Rubenstein
-------------------------------
Name:
-----------------------------
Title:
----------------------------
cc: James R. Doty, Esq.
Exhibit 5
Ladies and Gentlemen
Page 1
January 19, 1999
THE CARLYLE GROUP
1001 Pennsylvania Ave., N.W.
Washington, D.C. 20004-2505
(202) 347-2626
(202) 347-1818 (Fax)
July 29, 1997
Cooley Godward Castro Huddleson & Tatum
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Ladies and Gentlemen:
Reference is made to the Escrow Agreement, dated June 17, 1996, by and between
Marcel van Heesewijk ("Heesewijk"), Mattheus Wegbrans ("Wegbrans"), the Persons
listed as "Purchasers" on the signature pages thereto (the "Purchasers"), and
yourself, pursuant to which the certificates representing Four Million Three
Hundred Sixty-Eight Thousand Nine Hundred Thirty-Seven (4,368,937) shares of the
common stock of QCS Corporation ("QCS") were deposited with you to constitute
the Escrowed Shares (as such term is defined in the Escrow Agreement) in
accordance with the Escrow Agreement.
Pursuant to Section 4 of the Escrow Agreement, we hereby instruct you to
immediately deliver and remit to Carlyle QCS Partners, L.P. the certificates
representing One Million Four Hundred Fifty-Six Thousand Three Hundred Eleven
(1,456,311) Escrowed Shares, which constitute the number of Escrowed Shares that
Carlyle QCS Partners, L.P. is entitled to receive pursuant to Section 2 of the
Founders Agreement.
Sincerely yours,
CARLYLE QCS PARTNERS, L.P.
By: /s/ David M. Rubenstein
-------------------------------
Name:
-----------------------------
Title:
----------------------------
cc: James R. Doty, Esq.
Exhibit 6
(Exhibit A)
[QCS Letterhead]
June 17, 1998
Dear Series A Investors:
This letter sets forth the terms of an agreement in principle
between QCS Corporation (the "Corporation") and the holders (the "Series A
Investors") of Series A Preferred Stock (the "Series A Preferred Stock") of the
Corporation which would be acceptable to the undersigned in connection with a
proposed recapitalization (the "Recapitalization") of the Corporation. This
letter follows preliminary discussions between the Corporation and the Series A
Investors during which it was concluded that it is desirable for both the Series
A Investors and the Corporation to enter into this agreement in principle, which
is intended to be binding on the parties to the extent of the terms hereof, for
the purpose of simplifying the Corporation's capital structure.
Each undersigned Series A Investor (the "Holder") agrees that
such Holder will participate in a Recapitalization and enter into such
additional legally binding agreements and shareholder consents and approvals as
may be required and which shall be reasonably acceptable to such Holder. The
Recapitalization that each Holder agrees to participate in shall provide for the
following:
1. Restructuring of Series A Dividend. The Corporation and the
Series A Investors shall take all necessary action to
eliminate the dividend on the Series A Preferred Stock and
all rights to receive the accrued dividend as indicated on
the Corporations' financial statements for periods up to
and including the closing of the Recapitalization shall be
waived by the Series A Investors. In place of the dividend,
the Series A Investors shall be issued, on a pro-rata
basis, shares of preferred stock of the Corporation. The
shares of preferred stock issued pursuant to this right
should rank pari passu with the Series A Preferred Stock
and have the same voting and other rights as the Series A
Preferred Stock. The number of shares that the Series A
Investors will be entitled to purchase shall be determined
by dividing (a) the accrued dividend as of the date of
closing of the Recapitalization by (b) 66 2/3 % of the
average of the bid and ask prices of the Corporation's
common stock for the twenty (20) trading days prior to the
closing of the Recapitalization as reported on the
Over-The-Counter Bulletin Board reporting system (the
"Average Price"). In addition, the Corporation shall
provide registration rights for such purchased shares of
preferred stock on terms no less favorable than the
registration rights currently provided to the Series A
Investors;
-1-
<PAGE>
2. Indemnification; Payment of Costs. The Corporation shall
indemnify each Holder and hold it harmless from any
liability, damages, claims, losses, penalties, costs or
expense incurred by such Holder in connection with, or as a
result of, the Recapitalization. The foregoing
indemnification shall not apply to any taxes which may be
payable by Holder as a result of the Recapitalization and
Holder's legal fees and expenses incurred in the course of
the negotiation and preparation of any documentation
required in connection with the Recapitalization; and
3. Compliance With Laws. The Corporation shall take all
necessary actions to ensure that the Recapitalization is in
compliance with all laws, rules and regulations applicable
to the Corporation or a Holder. Upon request of a Holder,
the Corporation shall provide a Holder with an opinion of
counsel that the Recapitalization has been consummated in
compliance with all applicable laws as well as to any other
matters reasonably requested by such Holder.
Each Holder understands that the Corporation is in the process
of obtaining similar letters to be executed by the holders of 80% or more of the
Series A Preferred Stock. In the event that the Corporation obtains letters
executed by holders of 80% or more of the Series A Preferred Stock, the
Corporation shall provide prompt notice thereof to each Holder and this
Agreement shall be binding on each Holder through June 30, 1998. In the event an
80% agreement is not obtained by the Corporation on or before June 30, 1998,
then this agreement shall automatically terminate with no further action on the
party of either party being required and shall be of no further force or effect.
This letter supersedes prior discussions and agreements of the
parties relating to the subject matter hereof. The terms hereof may only be
amended by a writing executed by the Corporation and each Series A Investor.
If you are in agreement with the foregoing, please so indicate
by signing below and returning one signed copy of this letter to the
undersigned.
Sincerely,
QCS CORPORATION
/s/ Marcel van Heesewijk
Marcel van Heesewijk
Chairman of the Board
-2-
Exhibit 7
July 23, 1998
Dear Series A Investor:
Re: Elimination of the Series A Dividend
This letter is sent on behalf of the Board of Directors ("Board") of
QCS corporation (the "Company") in reference to that certain letter of consent
dated June 17, 1998 (the "Consent Letter"), which was circulated, in the form
attached hereto as Exhibit A, to all shareholders (the "Series A Investors")
holding Series A Preferred Stock (the "Series A") of the Company.
This will confirm that the Company has received on or prior to June 30,
1998 executed copies of the Consent Letter from Series A Investors holding in
excess of eight percent (80%) of the outstanding shares of Series A, as required
for approval under the terms applicable to the Series A in the Company's
Certificate of Incorporation, as amended (the"Certificate"). The Company
therefore intends promptly to carry out the terms of the transaction as
described in that letter, including, without limitation, (1) elimination of the
cumulative dividend on the Series A and (2) the issuance of new shares of Series
A to each existing Series A Investor pro rata with that Series A Investor's
respective holding of the Series A, as provided in the Consent letter and as
amplified in this letter (the "Series A Transaction").
The remainder of this letter describes the proposal of the Company's
Board to implement the Series A Transaction and to obtain the consent of the
Series A Investors to the proposed implementation.
There are currently 4,310,684 shares of Series A issued and outstanding
as of the date hereof. Exhibit B hereto sets forth the calculation of the number
of Series A shares which the Series A Investors will receive in consideration
for their agreement to eliminate the Series A dividend, as provided in the
Consent Letter, and using June 30, 1998 as the Effective Date for the Series A
Transaction, which is recommended and approved by the Board. On such basis, the
Company will issue an additional 708,557 Series A shares, after which issuance a
total of 5,019,241 Series A shares will be issued and outstanding.
The Company currently has a total of only 5,000,000 shares of Preferred
Stock authorized under its Certificate, which is an insufficient number to
implement the Series A Transaction. The Company is therefore required to amend
the Certificate to increase the total number of authorized but unissued
preferred shares, and such amendment (the "Amendment") requires the vote of 50%
of all shareholders and the vote of 80% of the Series A Investors voting as a
class. In the Amendment, the Company would also amend the Certificate to
eliminate the Series A dividend provisions, as the Series A Investors have
approved in the Consent Letter.
<PAGE>
Due to the administrative inconvenience and legal costs of soliciting
shareholder approvals for the Amendment, and since the Company has determined to
hold an annual shareholders meeting at a time and place to be set during
October, 1998, (the "1998 Annual Meeting"), the Board believes that it is in the
best interests of both the Company and its shareholders to seek the Amendment in
connection with the proxy solicitations that will be mailed to all shareholders
for the 1998 Annual Meeting.
The Company therefore consents and approves of, and requests that you
provide your consent to and approval of the proposed implementation of the
Series A Transaction, as provided in the Consent Letter and as modified in this
letter, including without limitation consent and approval of the following terms
and conditions with respect thereto:
1. As a Series A Investor, I have had the opportunity, either
individually or through my representative, to speak with
officers and employees of the Company and to conduct due
diligence so as to receive full and accurate information with
respect to the Company's affairs and operations, and have done
so to my satisfaction.
2. June 30, 1998 shall be the Effective Date for calculation of
the number of Series A shares to be issued in the Series A
Transaction, and I hereby accept and approve the calculations
set forth in Exhibit B.
3. The Series A Transaction shall be completed as soon as
reasonably practicable following the shareholders' approval of
the Amendment in connection with the 1998 Annual Meeting, to
be held in accordance with applicable proxy rules and other
required corporate procedures.
4. As a Series A Investor, I do hereby agree to vote all my
Series A shares and all my Common Shares in favor of the
Series A. Transaction (including without limitation the
Amendment).
5. As a Series A Investor, I do hereby agree to execute and
deliver such documents and instruments as may be reasonably
necessary from time to time to implement the Series A
Transaction (including without limitation the Amendment)
following its approval at the 1998 Annual Meeting. This
Section 6 shall survive expiration of this letter in
accordance with its terms.
6. The Company, the Series A Investors, and each of them do
understand and do hereby mutually acknowledge and agree that
the Company's remedy at law would be inadequate in the event
of a breach of either the Consent Letter of this letter by one
or more of the undersigned Series A Investors, and that the
Company shall therefore be entitled to seek injunctive relief
to specifically enforce the terms hereof.
7. The terms of the Consent Letter and this letter, when approved
by Series A Investors holding no less than eighty percent
(80%) of the outstanding shares of the Series A,
<PAGE>
shall be binding on all of the Series A Investors, to the
extent not prohibited by applicable law.
8. This letter and the Consent Letter as modified hereby shall be
of full force and effect through and including November 30,
1998 (the "Expiration Date"), on which date both the Consent
Letter and this letter shall expire if the Series A
Transaction has not been completed on or prior to said
Expiration Date.
Please confirm your consent and approval hereto by signing in the space
indicated below and returning to the Company an original executed copy of this
letter in the enclosed self-addressed, stamped envelope.
Sincerely,
QCS CORPORATION
/s/ Marcel van Heesewijk
Marcel van Heesewijk
Chairman of the Board
<PAGE>
QCS Corporation
Class A Preferred Shareholders
Conversion of Dividend
<TABLE>
<CAPTION>
Total
Preferred
# of Class A # of Class A Class A
Shares Total Shares @# Shares After
Name outstanding % of Total Original B Dividend ($) $1,2069 Conversion
---- ----------- ---------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Carlyle LP 1,456,311 33.78% $1,500,000.33 $288,904.48 239,377 1,695,688
STF Mgt 567,962 13.18% 585,000.39 112,672.80 93,357 661,319
Ltd-Sharp Tech
Fund 1
STF Mgt 305,825 7.09% 315,000.22 60,669.97 50,269 356,094
Ltd-Sharp Tech
Fund II
Lagunitas 388,350 9.01% 400,000.50 77,041.27 63,834 452,184
Partners
Proactive 388,350 9.01% 400,000.50 77,041.27 63,834 452,184
Partners
Herb Miller 485,437 11.26% 500,000.11 96,301.49 79,792 565,229
Oakwood Holdings 291,263 6.76% 300,000.89 57,781,05 47,876 339,139
Robert Zangrillo 38,835 0.90% 40,000.05 7,704.13 6,383 45,218
DeNoyange SA 194,175 4.50% 200,000.25 38,520.64 31,917 226,092
Hans Robben 48,544 1.13% 50,000.32 9,630.21 7,979 56,523
Peter Mills 97,088 2.25% 100,000.64 19,260.42 15,959 113,047
Peter Anson 24,272 0.56% 25,000.16 4,815.10 3,990 28,262
Steven Lebow 24,272 0.56% 25,000.16 4,815.10 3,990 28,262
4,310,684 100.00% $4,440,004.52 $855,157.95 708,557 5,019,241
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Average
Date Volume High/Ask Low/Bid Class Bid/Ask Bid/Ask
---- ------ -------- ------- ----- ------- -------
<S> <C> <C> <C> <C> <C> <C>
6/11/98 6,000 2 2 2 2 2,0000
6/12/98 2,000 2 2 2 2 2,0000
6/15/98 13,400 2 1/16 1 15/16 1 15/16 2 2,0000
6/16/98 36,500 1 7/8 1 11/16 1 11/16 1 25/32 1.7813
6/17/98 39,500 1 13/16 1 3/4 1 3/4 1 25/32 1.7813
6/18/98 5,600 1 13/16 1 3/4 1 3/4 1 25/32 1.7813
6/19/98 17,000 1 7/10 1 5/8 1 5/8 1 53/80 1.6625
6/22/98 4,000 1 11/16 1 11/16 1 11/16 1 11/16 1.6875
6/25/98 9,500 1 11/16 1 1/2 1 11/16 1 19/32 1.5938
9/26/98 11,000 1 13/16 1 3/4 1 3/4 1 25/32 1.7813
6/29/98 12,000 1 13/16 1 3/4 1 3/4 1 25/32 1.7813
6/30/98 3,000 1 7/8 1 7/8 1 7/8 1 7/8 1.8750
----- ------
147/58 1.8104
x 66.67%
------------
Conversion Price $1.2069
</TABLE>
