SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. )*
QS COMMUNICATIONS AG
____________________
(Name of Issuer)
Common Stock, Euro 1.00 Nominal Value Per Share
_______________________________________________
(Title of Class of Securities)
74727G
______________
(CUSIP Number)
Edward D. Sopher, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
(212) 872-1000
___________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 18, 2000
_____________________________________
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
Note. Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) 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 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).
Continued on following page(s)
Page 1 of 74 Pages
Exhibit Index: Page 17
<PAGE>
SCHEDULE 13D
CUSIP No. 74727G Page 2 of 74 Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
BAKER COMMUNICATIONS FUND, L.P.
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only 4 Source of Funds*
WC
5 Check Box 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 27,651,760
Beneficially
Owned By 8 Shared Voting Power
Each 10,230,246
Reporting
Person 9 Sole Dispositive Power
With 27,651,760
10 Shared Dispositive Power
10,230,246
11 Aggregate Amount Beneficially Owned by Each Reporting Person
37,882,006
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
37.16%
14 Type of Reporting Person*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 74727G Page 3 of 74 Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
BAKER CAPITAL PARTNERS, LLC
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only 4 Source of Funds*
AF
5 Check Box 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
Beneficially
Owned By 8 Shared Voting Power
Each 37,882,006
Reporting
Person 9 Sole Dispositive Power
With 0
10 Shared Dispositive Power
37,882,006
11 Aggregate Amount Beneficially Owned by Each Reporting Person
37,882,006
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
37.16%
14 Type of Reporting Person*
OO; IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 74727G Page 4 of 74 Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
BAKER QSC COINVESTORS, L.P.
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only 4 Source of Funds*
WC
5 Check Box 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 10,230,246
Beneficially
Owned By 8 Shared Voting Power
Each 0
Reporting
Person 9 Sole Dispositive Power
With 10,230,246
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
10,230,246
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
10.03%
14 Type of Reporting Person*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 74727G Page 5 of 74 Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
BAKER QSC COINVESTORS, LLC
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box 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
Beneficially
Owned By 8 Shared Voting Power
Each 10,230,246
Reporting
Person 9 Sole Dispositive Power
With 0
10 Shared Dispositive Power
10,230,246
11 Aggregate Amount Beneficially Owned by Each Reporting Person
10,230,246
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
10.03%
14 Type of Reporting Person*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 74727G Page 6 of 74 Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
JOHN C. BAKER
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only 4 Source of Funds*
AF
5 Check Box 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 9,130
Beneficially
Owned By 8 Shared Voting Power
Each 41,085,197
Reporting
Person 9 Sole Dispositive Power
With 9,130
10 Shared Dispositive Power
41,085,197
11 Aggregate Amount Beneficially Owned by Each Reporting Person
41,094,327
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
40.30%
14 Type of Reporting Person*
IN; IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 74727G Page 7 of 74 Pages
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
ASHLEY LEEDS
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only 4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States
Number of 7 Sole Voting Power
Shares 9,130
Beneficially
Owned By 8 Shared Voting Power
Each 41,085,197
Reporting
Person 9 Sole Dispositive Power
With 9,130
10 Shared Dispositive Power
41,085,197
11 Aggregate Amount Beneficially Owned by Each Reporting Person
41,094,327
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
40.30%
14 Type of Reporting Person*
IN; IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 8 of 74 Pages
This Statement on Schedule 13D relates to shares of Common Stock, Euro
1.00 nominal value per share (the "Shares"), of QS Communications AG (the
"Issuer"). This Statement is being filed by the Reporting Persons (as defined
herein) to report the recent acquisition of Shares of the Issuer, as a result of
which the Reporting Persons may be deemed to be the beneficial owners of more
than five percent of the outstanding Shares of the Issuer.
Item 1. Security and Issuer.
This Statement relates to the Shares. The address of the principal
executive office of the Issuer is Mathias-Bruggen Strasse 55, 50829 Cologne,
Germany.
Item 2. Identity and Background.
This Statement is being filed on behalf of each of the following
persons (collectively, the "Reporting Persons"):
i) Baker Communications Fund, L.P. ("Baker Fund");
ii) Baker Capital Partners, LLC ("Baker Partners");
iii) Baker QSC Coinvestors, L.P. ("Baker Coinvestors, L.P.");
iv) Baker QSC Coinvestors, LLC ("Baker Coinvestors, LLC");
v) Mr. John C. Baker ("Mr. Baker"); and
vi) Ms. Ashley Leeds ("Ms. Leeds").
This Statement relates to the Shares held for the accounts of certain
limited partnerships of which the general partner is managed by Mr. Baker and
Ms. Leeds (the "Limited Partnerships"), Baker Coinvestors, L.P., Baker Fund, Mr.
Baker and Ms. Leeds.
Baker Coinvestors, L.P. is a Delaware limited partnership with its
principal address at 540 Madison Avenue, New York, NY 10022. The principal
business of Baker Coinvestors, L.P. is investment in securities.
Baker Coinvestors, LLC is a Delaware limited liability company with its
principal address at 540 Madison Avenue, New York, NY 10022. The principal
business of Baker Coinvestors, LLC is to serve as the sole general partner of
Baker Coinvestors, L.P. As such, Baker Coinvestors, LLC, is vested with
investment discretion over the Shares held for the account of Baker Coinvestors,
L.P. As a result, Baker Coinvestors, LLC may be deemed the beneficial owner of
the Shares held for the account of Baker Coinvestors, L.P.
Baker Fund is a Delaware limited partnership with its principal address
at 540 Madison Avenue, New York, NY 10022. The principal business of Baker Fund
is investment in securities. Baker Fund is the managing member of Baker
Coinvestors, LLC, the general partner of Baker Coinvestors, L.P., and, as such,
is vested with investment discretion over the Shares held for the account of
Baker Coinvestors, L.P. As a result, Baker Fund may be deemed the beneficial
owner of the Shares held for the account of Baker Coinvestors, L.P.
Baker Partners is a Delaware limited liability company with its
principal address at 540 Madison Avenue, New York, NY 10022. The principal
business of Baker Partners is to serve as the sole general partner of Baker
Fund. As such, Baker Partners is vested with investment discretion over the
Shares held for the accounts of Baker Fund and Baker Coinvestors, L.P. As a
result, Baker Partners may be deemed the beneficial owner of the Shares held for
the accounts of Baker Fund and Baker Coinvestors, L.P. Current information
concerning the managers of Baker Partners is set forth in Annex A hereto.
<PAGE>
Page 9 of 74 Pages
Mr. Baker is a citizen of the United States. The principal occupation
of Mr. Baker is serving as a manager of Baker Partners, which is carried out at
Baker Partners' principal address. Mr. Baker, as a manager of Baker Partners, is
vested with investment discretion over the Shares held for the accounts of Baker
Fund and Baker Coinvestors, L.P. As a result, Mr. Baker may be deemed the
beneficial owner of the Shares held for the accounts of Baker Fund and Baker
Coinvestors, L.P. Mr. Baker also serves as a manager of the general partner of
the Limited Partnerships and, as such, is vested with investment discretion over
the Shares held for the accounts of the Limited Partnerships. As a result, Mr.
Baker may be deemed the beneficial owner of the Shares held for the accounts of
the Limited Partnerships.
Ms. Leeds is a citizen of the United States. The principal occupation
of Ms. Leeds is serving as a manager of Baker Partners, which is carried out at
Baker Partners' principal address. Ms. Leeds, as a manager of Baker Partners, is
vested with investment discretion over the Shares held for the accounts of Baker
Fund and Baker Coinvestors, L.P. As a result, Ms. Leeds may be deemed the
beneficial owner of the Shares held for the accounts of Baker Fund and Baker
Coinvestors, L.P. Ms. Leeds also serves as a manager of the general partner of
the Limited Partnerships and, as such, is vested with investment discretion over
the Shares held for the accounts of the Limited Partnerships. As a result, Ms.
Leeds may be deemed the beneficial owner of the Shares held for the accounts of
the Limited Partnerships.
During the past five years, none of the Reporting Persons and, to the
best of the Reporting Persons' knowledge, no other person identified in response
to this Item 2 has been (a) convicted in a criminal proceeding or (b) a party to
any civil proceeding as a result of which it or he has been 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 Limited Partnerships expended an aggregate of approximately Euro
41,641,333.8 of their working capital to purchase the securities reported herein
as being acquired in the last 60 days.
The securities held for the accounts of the Limited Partnerships, Baker
Coinvestors, L.P., Baker Fund, Mr. Baker and Ms. Leeds, may be held through
margin accounts maintained with brokers, which extend margin credit as and when
required to open or carry positions in their margin accounts, subject to
applicable federal margin regulations, stock exchange rules and such firms'
credit policies. The positions which may be held in the margin accounts,
including the Shares, are pledged as collateral security for the repayment of
debit balances in the respective accounts.
Item 4. Purpose of Transaction.
All of the securities reported herein as having been acquired for the
accounts of the Limited Partnerships, Baker Coinvestors, L.P., Baker Fund, Mr.
Baker and Ms. Leeds were acquired for investment purposes. Except as set forth
below, neither the Reporting Persons nor, to the best of their knowledge, any of
the other persons identified in response to Item 2, has any plans or proposals
that relate to or would result in any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
As members of the Supervisory Board of the Issuer, Mr. Baker and Ms.
Leeds may have influence over the corporate activities of the Issuer, including
as may relate to transactions described in subparagraphs (a) through (j) of Item
4 of Schedule 13D.
The Reporting Persons reserve the right to acquire, or cause to be
acquired, additional securities of the Issuer, to dispose of, or cause to be
disposed, such securities at any time or to formulate other purposes, plans or
proposals regarding the Issuer or any of its securities, to the extent deemed
advisable in light of general investment and trading policies of the Reporting
Persons, market conditions or other factors or take other actions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
<PAGE>
Page 10 of 74 Pages
(a) (i) Each of Baker Coinvestors, L.P. and Baker
Coinvestors, LLC may be deemed the beneficial owner of the 10,230,246 Shares
held by Baker Coinvestors, L.P. (approximately 10.03% of the total number of
Shares outstanding).
(ii) Each of Baker Fund and Baker Partners may be
deemed the beneficial owner of 37,882,006 Shares (approximately 37.16% of the
total number of Shares outstanding). This number consists of (1) 27,651,760
Shares held for the account of Baker Fund and (2) 10,230,246 Shares held for the
account of Baker Coinvestors, L.P.
(iii) Mr. Baker may be deemed the beneficial owner of
41,094,327 Shares (approximately 40.30% of the total number of Shares
outstanding assuming the conversion of convertible bonds held for the account of
Mr. Baker). This number consists of (1) 27,651,760 Shares held for the account
of Baker Fund, (2) 9,130 Shares issuable upon conversion by Mr. Baker of
convertible bonds currently held for his account, (3) 10,230,246 Shares held for
the account of Baker Coinvestors, L.P. and (4) 3,203,191 Shares held for the
accounts of the Limited Partnerships.
(iv) Ms. Leeds may be deemed the beneficial owner of
41,094,327 Shares (approximately 40.30% of the total number of Shares
outstanding assuming the conversion of convertible bonds held for the account of
Ms. Leeds). This number consists of (1) 27,651,760 Shares held for the account
of Baker Fund, (2) 9,130 Shares issuable upon conversion by Ms. Leeds of
convertible bonds currently held for her account, (3) 10,230,246 Shares held for
the account of Baker Coinvestors, L.P. and (4) 3,203,191 Shares held for the
accounts of the Limited Partnerships.
(b) (i) Mr. Baker may be deemed to have sole power to
direct the voting and disposition of the 9,130 Shares issuable upon conversion
by Mr. Baker of the convertible bonds currently held for his account.
(ii) Ms. Leeds may be deemed to have sole power to
direct the voting and disposition of the 9,130 Shares issuable upon conversion
by Ms. Leeds of the convertible bonds currently held for her account.
(iii) Baker Fund may be deemed to have sole power to
direct the voting and disposition of the 27,651,760 Shares held by Baker Fund.
(iv) Each of Baker Partners, Mr. Baker and Ms. Leeds
may be deemed to have shared power to direct the voting and disposition of the
27,651,760 Shares held by Baker Fund.
(v) Baker Coinvestors, L.P. may be deemed to have
sole power to direct the voting and disposition of the 10,230,256 Shares held by
Baker Coinvestors, L.P.
(vi) Each of Baker Coinvestors, LLC, Baker Fund Baker
Partners, Mr. Baker and Ms. Leeds may be deemed to have shared power to direct
the voting and disposition of the 10,230,246 Shares held by Baker Coinvestors,
L.P.
(vii) Each of Mr. Baker and Ms. Leeds may be deemed to
have shared power to direct the voting and disposition of the 3,203,191 Shares
held by the Limited Partnerships.
(c) Except for the transactions listed on Annex B hereto and
for the issuance of convertible bonds to Mr. Baker and Ms. Leeds as described
herein, there have been no transactions effected with respect to the Shares
since February 27, 2000 (60 days prior to the date hereof) by any of the
Reporting Persons.
(d) (i) Mr. Baker has the right to participate in the
receipt of dividends from or proceeds from the sale of securities of the Issuer
issuable upon conversion by Mr. Baker of convertible bonds currently held for
his account.
<PAGE>
Page 11 of 74 Pages
(ii) Ms. Leeds has the right to participate in the
receipt of dividends from or proceeds from the sale of securities of the Issuer
issuable upon conversion by Ms. Leeds of convertible bonds currently held for
her account.
(iii) The partners of Baker Fund have the right to
participate in the receipt of dividends from or proceeds from the sale of
securities of the Issuer, including the Shares, held for the account of Baker
Fund in accordance with their partnership interests in Baker Fund.
(iv) The partners of Baker Coinvestors, L.P. have the
right to participate in the receipt of dividends from or proceeds from the sale
of securities of the Issuer, including the Shares, held for the account of Baker
Coinvestors, L.P. in accordance with their partnership interests in Baker
Coinvestors, L.P.
(v) The partners of the Limited Partnerships have
the right to participate in the receipt of dividends from or proceeds from the
sale of securities of the Issuer, including the Shares, held for the accounts of
the Limited Partnerships in accordance with their partnership interests in the
Limited Partnerships.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
In connection with an underwritten public offering of Shares of the
Issuer, certain Reporting Persons entered various lock-up agreements. On April
16, 2000, each of Baker Coinvestors, L.P., Baker Fund and Mr. Baker entered into
a lock-up agreement, the form of which is attached hereto as Exhibit C. The
signatories to this form of lock-up agreement agreed not to offer or sell any
Shares publicly or in any other way, directly or indirectly, or to take any
other actions which could be regarded as equal to an offering for a period of
six months from the date of the listing of the Shares on the "Neuer Markt." On
April 14, 2000, each of Baker Fund and one of the Limited Partnerships entered
into a lock-up agreement with Morgan Stanley & Co. International Limited
("Morgan Stanley"), the form of which is attached hereto as Exhibit D. The
signatories to this form of lock-up agreement indicated that they intended to
exercise their respective pre-emptive rights in the Issuer's initial public
offering and agreed, among other things, not to offer, pledge, sell, lend or
otherwise dispose of any Shares purchased in the initial public offering for a
period of 180 days after the date of the final prospectus. On April 18, 2000,
Mr. Baker entered into a lock-up agreement with Morgan Stanley and the other
underwriters, the form of which is attached hereto as Exhibit E. Mr. Baker
agreed, among other things and with certain limitations, not to offer, pledge,
sell, lend or otherwise dispose of any Shares for a period of 180 days after the
date of the final prospectus without the prior written consent of Morgan Stanley
acting on behalf of the other underwriters.
The foregoing descriptions of the lock-up agreements do not purport to
be complete and are qualified in their entirety by reference to the lock-up
agreements, which are incorporated herein by reference as Exhibits C, D and E to
this Statement.
On April 19, 2000, Baker Fund entered into an Overseas Securities
Lender's Agreement with Morgan Stanley attached hereto as Exhibit F. Pursuant to
a borrowing request that may be made under this Overseas Securities Lender's
Agreement, Baker Fund agreed to loan Morgan Stanley up to 3,030,000 Shares,
which Shares or identical securities would be returned to Baker Fund no later
than May 18, 2000.
The foregoing description of the Overseas Securities Lender's Agreement
does not purport to be complete and is qualified in its entirety by reference to
the Overseas Securities Lender's Agreement, which is incorporated herein by
reference as Exhibit E to this Statement.
From time to time, each of the Reporting Persons may lend securities,
including the Shares, to brokers, banks or other financial institutions. These
loans typically obligate the borrower to return the securities, or an equal
amount of securities of the same class, to the lender and typically provide that
the borrower is entitled to exercise voting rights and to retain dividends
<PAGE>
Page 12 of 74 Pages
during the term of the loan. From time to time, to the extent permitted by
applicable laws, each of the Reporting Persons may borrow securities, including
the Shares, for the purpose of effecting, and may effect, short sale
transactions, and may purchase securities for the purpose of closing out short
positions in such securities.
Item 7. Material to be Filed as Exhibits.
A. Power of Attorney, dated April 27, 2000, granted by
Baker Coinvestors, L.P., Baker Coinvestors, LLC, Baker Partners, Mr. Baker and
Ms. Leeds in favor of Baker Fund.
B. Joint Filing Agreement, dated April 27, 2000, by and
among Baker Coinvestors, L.P., Baker Coinvestors, LLC, Baker Fund, Baker
Partners, Mr. Baker and Ms. Leeds.
C. Form of Lock-up Agreement, dated April 16, 2000, by
Baker Coinvestors, L.P., Baker Fund and Mr. Baker.
D. Form of Lock-up Agreement, dated April 14, 2000, by
Baker Fund and one of the Limited Partnerships.
E. Form of Lock-up Agreement, dated April 18, 2000, by
Mr. Baker.
F. Overseas Securities Lender's Agreement, dated April
19, 2000, between Morgan Stanley and Baker Fund.
<PAGE>
Page 13 of 74 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this Statement is
true, complete and correct.
Date: April 27, 2000
BAKER QSC COINVESTORS, L.P.
By: Baker Communications Fund, L.P.
Attorney-in-Fact
By: Baker Capital Partners, LLC
Its General Partner
By: /S/ JOHN C. BAKER
--------------------------
John C. Baker
Manager
BAKER QSC COINVESTORS, L.P.
By: Baker Communications Fund, L.P.
Attorney-in-Fact
By: Baker Capital Partners, LLC
Its General Partner
By: /S/ JOHN C. BAKER
--------------------------
John C. Baker
Manager
BAKER COMMUNICATIONS FUND, L.P.
By: Baker Capital Partners, LLC
Its General Partner
By: /S/ JOHN C. BAKER
-----------------------------------
John C. Baker
Manager
BAKER CAPITAL PARTNERS, LLC
By: /S/ JOHN C. BAKER
--------------------------
John C. Baker
Manager
<PAGE>
Page 14 of 74 Pages
JOHN C. BAKER
/S/ JOHN C. BAKER
__________________________________________________
ASHLEY LEEDS
/S/ ASHLEY LEEDS
__________________________________________________
<PAGE>
Page 15 of 74 Pages
ANNEX A
The following is a list of all of the persons (other than Mr. Baker and
Ms. Leeds) who serve as managers of Baker Partners.
Edward W. Scott
Lawrence Bettino
Henry Baker
Each of the above-listed persons is a United States citizen whose
principal occupation is serving as a manager of Baker Partners, and each has a
business address c/o Baker Capital Partners, LLC, 540 Madison Avenue, New York,
NY 10022
To the best of the Reporting Persons' knowledge:
(a) None of the above persons holds any Shares directly.
(b) None of the above persons has any contracts, arrangements,
understandings or relationships with respect to the Shares.
<PAGE>
Page 16 of 74 Pages
ANNEX B
RECENT TRANSACTIONS IN THE SECURITIES OF
QS COMMUNICATIONS AG
Date of Nature of Number of
For the account of Transaction Transaction Shares Price
LIMITED PARTNERSHIPS 4/18/00 PURCHASE 3,203,171 EURO 13 /1/
/1/ Acquired in the Issuer's initial public offering.
On April 7, 2000, Baker Fund transferred 20 shares of Series A
Convertible Preferred Stock to one of the Limited Partnerships in exchange for
5.54 euros per share. Upon the Issuer's initial public offering, these shares
automatically converted into Shares.
<PAGE>
Page 17 of 74 Pages
EXHIBIT INDEX
Page No.
--------
A. Power of Attorney, dated April 28, 2000, granted by
Baker QSC Coinvestors, L.P., Baker QSC Coinvestors, LLC,
Baker Capital Partners, LLC, Mr. John C. Baker and Ms.
Ashley Leeds in favor of Baker Communications Fund, L.P. 18
B. Joint Filing Agreement, dated April 28, 2000, by and
among Baker QSC Coinvestors, L.P., Baker QSC
Coinvestors, LLC, Baker Communications Fund, L.P., Baker
Capital Partners, LLC, Mr. John C. Baker and Ms. Ashley
Leeds. 20
C. Form of Lock-up Agreement, dated April 16, 2000, by
Baker QSC Coinvestors, L.P., Baker Communications Fund,
L.P. and Mr. John C. Baker. 22
D. Form of Lock-up Agreement, dated April 14, 2000, by
Baker Communications Fund, L.P. and one of the Limited
Partnerships. 23
E. Form of Lock-up Agreement, dated April 18, 2000, by Mr.
John C. Baker. 25
F. Overseas Securities Lender's Agreement, dated April 19,
2000, between Morgan Stanley & Co. International Limited
and Baker Communications Fund, L.P. 27
Page 18 of 74 Pages
EXHIBIT A
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that we, BAKER QSC COINVESTORS, L.P., BAKER QSC
COINVESTORS, LLC, BAKER CAPITAL PARTNERS, LLC, JOHN C. BAKER and ASHLEY LEEDS
hereby make, constitute and appoint BAKER COMMUNICATIONS FUND, L.P. as our agent
and attorney-in-fact for the purpose of executing in my name all documents,
certificates, instruments, statements, filings and agreements ("documents") to
be filed with or delivered to any foreign or domestic governmental or regulatory
body or required or requested by any other person or entity pursuant to any
legal or regulatory requirement relating to the acquisition, ownership,
management or disposition of securities or other investments, and any other
documents relating or ancillary thereto, including but not limited to, all
documents relating to filings with the United States Securities and Exchange
Commission (the "SEC") pursuant to the Securities Act of 1933 or the Securities
Exchange Act of 1934 (the "Act") and the rules and regulations promulgated
thereunder, including: (1) all documents relating to the beneficial ownership of
securities required to be filed with the SEC pursuant to Section 13(d) or
Section 16(a) of the Act including, without limitation: (a) any acquisition
statements on Schedule 13D or Schedule 13G and any amendments thereto, (b) any
joint filing agreements pursuant to Rule 13d-1(k), and (c) any initial
statements of, or statements of changes in, beneficial ownership of securities
on Form 3, Form 4 or Form 5 and (2) any information statements on Form 13F
required to be filed with the SEC pursuant to Section 13(f) of the Act. All past
acts of the attorney-in-fact in furtherance of the foregoing are hereby
ratified and confirmed.
This power of attorney shall be valid from the date hereof until revoked by any
of the undersigned.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the 27th
day of April 2000.
BAKER QSC COINVESTORS, L.P.
By: Baker QSC Coinvestors, LLC
Its General Partner
By: Baker Communications Fund, L.P.
Its Managing Member
By: Baker Capital Partners, LLC
Its General Partner
By: /S/ JOHN C. BAKER
---------------------
John C. Baker
Manager
BAKER QSC COINVESTORS, L.P.
By: Baker Communications Fund, L.P.
Its Managing Member
By: Baker Capital Partners, LLC
Its General Partner
By: /S/ JOHN C. BAKER
-----------------------------
John C. Baker
Manager
<PAGE>
Page 19 of 74 Pages
BAKER CAPITAL PARTNERS, LLC
By: /S/ JOHN C. BAKER
-----------------------------
John C. Baker
Manager
JOHN C. BAKER
/S/ JOHN C. BAKER
____________________________________
ASHLEY LEEDS
/S/ ASHLEY LEEDS
____________________________________
Page 20 of 74 Pages
EXHIBIT B
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule 13D with
respect to the Common Stock of QS Communications AG dated April 27, 2000 is, and
any amendments thereto signed by each of the undersigned shall be, filed on
behalf of each of us pursuant to and in accordance with the provisions of Rule
13d-1(f) under the Securities Exchange Act of 1934.
Date: April 27, 2000
BAKER QSC COINVESTORS, L.P.
By: Baker Communications Fund, L.P.
Attorney-in-Fact
By: Baker Capital Partners, LLC
Its General Partner
By: /S/ JOHN C. BAKER
--------------------------
John C. Baker
Manager
BAKER QSC COINVESTORS, L.P.
By: Baker Communications Fund, L.P.
Attorney-in-Fact
By: Baker Capital Partners, LLC
Its General Partner
By: /S/ JOHN C. BAKER
--------------------------
John C. Baker
Manager
BAKER COMMUNICATIONS FUND, L.P.
By: Baker Capital Partners, LLC
Its General Partner
By: /S/ JOHN C. BAKER
-----------------------------------
John C. Baker
Manager
<PAGE>
Page 21 of 74 Pages
BAKER CAPITAL PARTNERS, LLC
By: /S/ JOHN C. BAKER
--------------------------
John C. Baker
Manager
JOHN C. BAKER
/S/ JOHN C. BAKER
__________________________________________________
ASHLEY LEEDS
/S/ ASHLEY LEEDS
__________________________________________________
Page 22 of 74 Pages
EXHIBIT C
TRANSLATION
Non-selling Undertaking
________________________(Name)___________________________(PLZ, Wohnort)
________________________(Vorname)________________________(Land)
________________________(Strasse)________________________(Telefon/Telefax)
have ___ shares in QS Communications AG, Cologne.
I hereby undertake provided that the shares of QS Communications AG are accepted
to the "Neuer Markt" until December 31st, 2000, in compliance with the relevant
stipulations of the German Stock Corporation Act, within the period of 6 months
from the date of the listing at the "Neuer Markt", not to offer, sell, any
shares publicly or in any other way directly or indirectly or to take any other
actions which could be regarded as equal to an offering.
In the event of a violation of the aforementioned undertaking
1. I hereby undertake to pay a contractual penalty in favour of the
"Deutsche Borse AG" in the amount of the difference between the issued
price and the sale proceeds or the equivalent profit. Should the sale
proceeds be less than the issued price, I undertake to pay the
difference between the sale proceeds and the price that I have paid for
the acquisition of the shares as a penalty. The "Deutsche Borse AG"
will use the amount for the development of the "Neuer Markt";
2. I hereby waive any rights in relation to the deposit bank for execution
of the share transfer and for delivery of the shares. I am aware of the
fact that in the event of a violation of the aforementioned
undertaking, the delivery may be denied and I could be subject to a
claim for damages in relation to the purchasing party.
I hereby expressly agree with the aforementioned stipulations.
16 April 2000
__________________________________ __________________________________
(Date) (Signature)
__________________________________ __________________________________
Page 23 of 74 Pages
EXHIBIT D
QS Communications AG
Mathias-Bruggen-Strasse 55
50829 Koln
Bundesrepublik Deutschland
Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
United Kingdom
Lock-up Statement
[Shareholder Name]
____________________(Surname) ____________________(City)
____________________(First name) ____________________(Country)
____________________(Street) ____________________(Telephone/Telefax)
am shareholder of QS Communications AG, Cologne ("Company") and intend to
exercise my pre-emptive rights under Sec. 12.9 of the subscription and
Shareholders' Agreement of November 4, 2000 and thus to purchase out of the new
shares to be issued in the IPO (the "Primary IPO Shares") of the Company all or
part of the shares which I am entitled to purchase under my pre-emptive rights.
I hereby undertake, subject to the occurrence of an Initial Public Offering
(IPO) of the Company at the Neuer Markt, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the IPO at the Neuer Market (the "Prospectus"), without the prior written
consent of Morgan Stanley not to (1) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any Primary IPO Shares or any securities
convertible into or exercisable or exchangeable for the Company's common stock,
or (2) enter into any swap or other arrangement that transfers to another
entity, in whole or in part, any of the economic consequences of ownership of
the Company's Primary IPO Shares, whether any such transactions described in
clause (1) or (2) above is to be settled by delivery of such shares or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (a) the sale of any Primary IPO Shares to the Underwriters pursuant to the
Underwriting Agreement or (b) transactions relating to Primary IPO Shares or
other securities acquired in open market transactions after the completion of
the IPO.
<PAGE>
Page 24 of 74 Pages
In case of a breach of this undertaking, I waive my right vis-a-vis the bank
where the Primary IPO Shares will be deposited to obtain title and interest in
and delivery of the Primary IPO Shares for which I have exercised my pre-emptive
rights. I am aware of the fact that a breach of my undertakings as herein
provided may subject me to a claim for damages and to a rejection of transfer
and delivery of the Primary IPO Shares for which I have exercised the
pre-emptive rights. This is without a prejudice to any other rights which the
Company or Morgan Stanley may be entitled to as a result of my breach of the
undertakings as herein provided.
(city) 14 April, 2000
__________________________________ ___________________
(signature)
Page 25 of 74 Pages
EXHIBIT E
April 18, 2000
Morgan Stanley & Co. International Limited
on behalf of itself and
on behalf of the Underwriters named in
Schedule 1 to the Underwriting Agreement
C/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4AQ
United Kingdom
Ladies and Gentlemen:
The undersigned understands that Morgan Stanley & Co. International Limited
and the other several Underwriters named in Schedule 1 to the Underwriting
Agreement propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with QB Communications AG, a stock corporation
incorporated under the laws of the Federal Republic of Germany (the
"Company") providing for the public offering (the "Public Offering) by the
several Underwriters of 20,200 shares (the "Shares") of the common stock,
EUR 1 nominal notional amount per share, of the Company (the "Common
Stock").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Morgan
Stanley on behalf of the Underwriters, the undersigned will not, during the
period commencing on the date hereof and ending 180 days after the date of
the final prospectus relating to the Public Offering (the "Prospectus"),
(1) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, lend, or otherwise transfer or dispose of, directly
or indirectly, any shares of the Company's common stock (regardless whether
purchased before or during this Public Offering) or any securities
convertible into or exercisable or exchangeable for the Company's common
stock, or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership
of the Company's common stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of the Company's
common stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (a) the sale of any Shares to the Underwriters
pursuant to the Underwriting Agreement or (b) transactions relating to
shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering. In addition, the
undersigned agrees that, without the prior written consent of Morgan
Stanley on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 180 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of the Company's common stock or any security
convertible into or exercisable or exchangeable for the Company's common
stock.
<PAGE>
Page 26 of 74 Pages
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
Name /s/ John C. Baker
----------------------------
Address 540 Madison Avenue
New York, NY 10022
(John C. Baker)
DATED April 19, 2000
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
-and-
BAKER COMMUNICATIONS FUND, L.P.
OVERSEAS SECURITIES LENDER'S AGREEMENT
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
Clause Page
- ------ ----
<S> <C> <C>
1. INTERPRETATION.........................................................................4
2. LOANS OF SECURITIES...................................................................19
3. DELIVERY OF SECURITIES................................................................19
4. RIGHTS AND TITLE......................................................................19
5. RATES.................................................................................22
6. COLLATERAL............................................................................23
7. REDELIVERY OF EQUIVALENT SECURITIES...................................................27
8. SET-OFF ETC...........................................................................29
9. TAXATION..............................................................................31
10. LENDER'S WARRANTIES...................................................................31
11. BORROWER'S WARRANTIES.................................................................32
12. EVENTS OF DEFAULT.....................................................................33
13. OUTSTANDING PAYMENTS..................................................................34
14. TRANSACTIONS ENTERED INTO AS AGENT....................................................34
15. TERMINATION OF COURSE OF DEALINGS BY NOTICE...........................................36
16. GOVERNING PRACTICES...................................................................36
17. OBSERVANCE OF PROCEDURES..............................................................37
18. SEVERANCE.............................................................................37
19. SPECIFIC PERFORMANCE..................................................................37
20. NOTICES...............................................................................37
2
<PAGE>
21. ASSIGNMENT............................................................................37
22. NON-WAIVER............................................................................37
23. ARBITRATION AND JURISDICTION..........................................................38
24. TIME..................................................................................38
25. RECORDING.............................................................................38
26. GOVERNING LAW.........................................................................38
SCHEDULE.......................................................................................40
</TABLE>
3
<PAGE>
THIS AGREEMENT is made the 19th day of April, 2000
BETWEEN:-
(1) Morgan Stanley & Co. International Limited (the "Borrower"), a company
incorporated under the laws of England and Wales whose registered
office is at 25 Cabot Square, Canary Wharf, London E14 4QA, Great
Britain; and
(2) Baker Communications Fund, L.P. (the "Lender"), a limited partnership
organized under the laws of the State of Delaware, whose registered
office is c/o Baker Capital Corp., 540 Madison Avenue, New York, New
York 10022, United States.
WHEREAS:-
1. From time to time the Parties hereto may enter into transactions in
which one Party (the "Lender") agrees to lend to the other (the
"Borrower") from time to time Securities (as hereinafter defined),
subject to any Inland Revenue provisions then in force.
2. All transactions carried out under this Agreement will be effected in
accordance with the Rules (as hereinafter defined) TOGETHER WITH
current market practices, customs and conventions.
NOW THIS AGREEMENT WITNESSETH AND IT IS HEREBY AGREED AS FOLLOWS:-
1. INTERPRETATION
(A) In this Agreement:-
"Act of Insolvency" means in relation to either Party
(i) its making a general assignment for
the benefit of, or entering into a
reorganization, arrangement, or
composition with creditors, or
(ii) its admitting in writing that it is
unable to pay its debts as they
become due, or
4
<PAGE>
(iii) its seeking, consenting to or
acquiescing in the appointment of
any trustee, administrator,
receiver or liquidator or analogous
officer of it or any material part
of its property, or;
(iv) the presentation or filing of a
petition in respect of it (other
than by the other Party to this
Agreement in respect of any
obligation under this Agreement) in
any court or before any agency
alleging or for the bankruptcy,
winding-up or insolvency of such
Party (or any analogous proceeding)
or seeking any reorganization,
arrangement, composition,
re-adjustment, administration,
liquidation, dissolution or similar
relief under any present or future
statute, law or regulation, such
petition (except in the case of a
petition for winding-up or any
analogous proceeding in respect of
which no such 30 day period shall
apply) not having been stayed or
dismissed within 30 days of its
filing;
(v) the appointment of a receiver,
administrator, liquidator or
trustee or analogous officer of
such Party over all or any material
part of such Party's property; or
(vi) the convening of any meeting of its
creditors for the purpose of
considering a voluntary arrangement
as referred to in Section 3 of the
Insolvency Act 1986 (or any
analogous proceeding);
"Agent" shall have the same meaning given in Clause
14;
"Alternative Collateral" means Collateral of a Value equal to the
Collateral delivered pursuant to Clause 6
and provided by way of substitution for
Collateral originally delivered or
previously substituted in accordance with
the provisions of Clauses 6(F) or 6(G);
5
"Appropriate Tax
Vouchers" means:-
(i) either such tax vouchers and/or
certificates as shall enable the
recipient to claim and receive from
any relevant tax authority, in
respect of interest, dividends,
distributions and/or other amounts
(including for the avoidance of
doubt any manufactured payment)
relating to particular Securities,
all and any repayment of tax or
benefit of tax credit to which the
Lender would have been entitled but
for the loan of Securities in
accordance with this Agreement
and/or to which the Lender is
entitled in respect of tax withheld
and accounted for in respect of any
manufactured payment; or such tax
vouchers and/or certificates as are
provided by the Borrower which
evidence an amount of overseas tax
deducted which shall enable the
recipient to claim and receive from
any relevant tax authority all and
any repayment of tax from the UK
Inland Revenue or benefits of tax
credit in the jurisdiction of the
recipient's residence; and
(ii) such vouchers and/or certificates
in respect of interest, dividends,
distributions and/or other amounts
relating to particular Collateral;
"Approved UK Collecting
Agent" means a person who is approved as such for
the purposes of the Rules of the UK Inland
Revenue relating to stocklending and
manufactured overseas dividends;
"Approved Intermediary" means a person who is approved as such for
the purposes of the Rules of the UK Inland
Revenue relating to stocklending and
manufactured overseas dividends;
"Assured Payment" means a payment obligation of a Settlement
Bank arising (under the Assured Payment
6
Agreement) as a result of a transfer of
stock or other securities to a CGO stock
account of a member of the CGO for whom
that Settlement Bank is acting;
"Assured Payment
Agreement" means an agreement dated 24 October 1986
between the Bank of England and all the
other banks which are for the time being
acting as Settlement Banks in relation to
the CGO regulating the obligations of such
banks to make payments in respect of
transfers of securities through the CGO as
supplemented and amended from time to time;
"Base Currency" has the meaning given in the Schedule
hereto;
"Bid Price" in relation to Equivalent Securities or
Equivalent Collateral means the best
available bid price thereof on the most
appropriate market in a standard size;
"Bid Value" Subject to Clause 8(E) means:-
(a) in relation to Equivalent
Collateral at a particular time:-
(i) in relation to Collateral
Types B(x) and C (more
specifically referred to in
the Schedule) the Value
thereof as calculated in
accordance with such
Schedule;
(ii) in relation to all other
types of Collateral (more
specifically referred to in
the Schedule) the amount
which would be received on
a sale of such Collateral
at the Bid Price thereof at
such time less all costs,
fees and expenses that
would be incurred in
connection with selling or
otherwise realizing such
Equivalent Collateral,
calculated on the
assumption that the
aggregate thereof is the
least that could reasonably
be expected to be paid in
order to carry out such
sale or realization and
adding thereto the amount
of any interest, dividends,
distributions or other
amounts paid to the Lender
and in respect of which
equivalent amounts have not
7
been paid to the Borrower
in accordance with Clause
6(G) prior to such time in
respect of such Equivalent
Collateral or the original
Collateral held gross of
all and any tax deducted or
paid in respect thereof;
and
(b) in relation to Equivalent
Securities at a particular time the
amount which would be received on a
sale of such Equivalent Securities
at the Bid Price thereof at such
time less all costs, fees and
expenses that would be incurred in
connection therewith, calculated on
the assumption that the aggregate
thereof is the least that could
reasonably be expected to be paid
in order to carry out the
transaction;
"Borrower" with respect to a particular loan
of Securities means the Borrower as
referred to in Recital 1 of this
Agreement;
"Borrowing Request" means a request made (by
telephone or otherwise) by
the Borrower to the Lender
pursuant to Clause 2(A)
specifying the description,
title and amount of the
Securities required by the
Borrower, the proposed
Settlement Date and
duration of such loan and
the date, time, mode and
place of delivery which
shall, where relevant,
include the bank agent
clearing or settlement
system and account to which
delivery of the Securities
is to be made;
8
"Business Day" means a day on which banks and securities
markets are open for business generally in
London and, in relation to the delivery or
redelivery of any of the following in
relation to any loan, in the place(s) where
the relevant Securities, Equivalent
Securities, Collateral (including Cash
Collateral) or Equivalent Collateral are to
be delivered;
"Cash Collateral" means Collateral that takes the form of a
deposit of currency;
"Central Gilts Office"
or ACGO" means the computer based system managed by
the Bank of England to facilitate the
book-entry transfer of gilt-edged
securities;
"CGO Collateral" shall have the meaning specified in
paragraph A of the Schedule;
"CGO Rules" means the requirements of the CGO for the
time being in force as defined in the
membership agreement regulating membership
of the CGO;
"Close of Business" means the time at which banks close in the
business center in which payment is to be
made or Collateral is to be delivered;
"Collateral" means such securities or financial
instruments or deposits of currency as are
referred to in the Schedule hereto or any
combination thereof which are delivered by
the Borrower to the Lender in accordance
with this Agreement and shall include the
certificates and other documents of or
evidencing title and transfer in respect of
the foregoing (as appropriate), and shall
include Alternative Collateral;
"Defaulting Party" shall have the meaning given in Clause 12;
"Equivalent Collateral" or
9
<PAGE>
"Collateral Equivalent to" in relation to any Collateral provided
under this Agreement means securities, cash
or other property, as the case may be, of
an identical type, nominal value,
description and amount to particular
Collateral so provided and shall include
the certificates and other documents of or
evidencing title and transfer in respect of
the foregoing (as appropriate). If and to
the extent that such Collateral consists of
securities that are partly paid or have
been converted, subdivided, consolidated,
redeemed, made the subject of a takeover,
capitalization issue, rights issue or event
similar to any of the foregoing, the
expression shall have the following
meaning:
(a) in the case of conversion,
subdivision or consolidation the
securities into which the relevant
Collateral has been converted,
subdivided or consolidated PROVIDED
THAT, if appropriate, notice has
been given in accordance with
Clause 4(B)(vii);
(b) in the case of redemption, a sum of
money equivalent to the proceeds of
the redemption;
(c) in the case of a takeover, a sum of
money or securities, being the
consideration or alternative
consideration of which the Borrower
has given notice to the Lender in
accordance with Clause 4(B)(vii);
(d) in the case of a call on partly
paid securities, the paid-up
securities PROVIDED THAT the
Borrower shall have paid to the
Lender an amount of money equal to
the sum due in respect of the call;
10
<PAGE>
(e) in the case of a capitalization
issue, the relevant Collateral
TOGETHER WITH the securities
allotted by way of a bonus thereon;
(f) in the case of a rights issue, the
relevant Collateral TOGETHER WITH
the securities allotted thereon,
PROVIDED THAT the Borrower has
given notice to the Lender in
accordance with Clause 4(B)(vii),
and has paid to the Lender all and
any sums due in respect thereof;
(g) in the event that a payment or
delivery of Income is made in
respect of the relevant Collateral
in the form of securities or a
certificate which may at a future
date be exchanged for securities or
in the event of an option to take
Income in the form of securities or
a certificate which may at a future
date be exchanged for securities,
notice has been given to the
Borrower in accordance with Clause
4(B)(vii) the relevant Collateral
TOGETHER WITH securities or a
certificate equivalent to those
allotted;
(h) in the case of any event similar to
any of the foregoing, the relevant
Collateral TOGETHER WITH or
replaced by a sum of money or
securities equivalent to that
received in respect of such
Collateral resulting from such
event;
For the avoidance of doubt, in the case of
Bankers' Acceptances (Collateral type
B(v)), Equivalent Collateral must bear
dates, acceptances and endorsements (if
11
<PAGE>
any) by the same entities as the bill to
which it is intended to be equivalent and
for the purposes of this definition,
securities are equivalent to other
securities where they are of an identical
type, nominal value, description and amount
and such term shall include the certificate
and other documents of or evidencing title
and transfer in respect of the foregoing
(as appropriate);
"Equivalent Securities" means securities of an identical type,
nominal value, description and amount to
particular Securities borrowed and such
term shall include the certificates and
other documents of or evidencing title and
transfer in respect of the foregoing (as
appropriate). If and to the extent that
such Securities are partly paid or have
been converted, subdivided, consolidated,
redeemed, made the subject of a takeover,
capitalization issue, rights issue or event
similar to any of the foregoing, the
expression shall have the following
meaning:
(a) in the case of conversion,
subdivision or consolidation, the
securities into which the borrowed
Securities have been converted,
subdivided or consolidated PROVIDED
THAT appropriate, notice has been
given in accordance with Clause
4(B)(vii);
(b) in the case of redemption, a sum of
money equivalent to the proceeds of
the redemption;
(c) in the case of takeover, a sum of
money or securities, being the
consideration or alternative
consideration of which the Lender
has given notice to the Borrower in
accordance with Clause 4(B)(vii);
12
<PAGE>
(d) in the case of a call on partly
paid securities, the paid-up
securities PROVIDED THAT the Lender
shall have paid to the Borrower an
amount of money equal to the sum
due in respect of the call;
(e) in the case of a capitalization
issue, the borrowed Securities
TOGETHER WITH the securities
allotted by way of a bonus thereon;
(f) in the case of a rights issue, the
borrowed Securities TOGETHER WITH
the securities allotted thereon,
PROVIDED THAT the Lender has given
notice to the Borrower in
accordance with Clause 4(B)(vii),
and has paid to the Borrower all
and any sums due in respect
thereof;
(g) in the event that a payment or
delivery of Income is made in
respect of the borrowed Securities
in the form of securities or a
certificate which may at a future
date be exchanged for securities or
in the event of an option to take
Income in the form of securities or
a certificate which may at a future
date be exchanged for securities,
notice has been given to the
Borrower in accordance with Clause
4(B)(vii) the borrowed Securities
TOGETHER WITH securities or a
certificate equivalent to those
allotted;
(h) in the case of any event similar to
any of the foregoing, the borrowed
Securities TOGETHER WITH or
replaced by a sum of money or
securities equivalent to that
13
<PAGE>
received in respect of such
borrowed Securities resulting from
such event;
For the purposes of this
definition, securities are
equivalent to other securities
where they are of an identical
type, nominal value, description
and amount and such term shall
include the certificate and other
documents of or evidencing title
and transfer in respect of the
foregoing (as appropriate);
"Event of Default" has the meaning given in Clause 12;
"Income" any interest, dividends or other
distributions of any kind whatsoever with
respect to any Securities or Collateral;
"Income Payment Date" with respect to any Securities or
Collateral means the date on which Income
is paid in respect of such Securities or
Collateral, or, in the case of registered
Securities or Collateral, the date by
reference to which particular registered
holders are identified as being entitled to
payment of Income;
"Lender" with respect to a particular loan of
Securities means the Lender as referred to
in Recital 1 of this Agreement;
"Manufactured Dividend" shall have the meaning given in Clause
4(B)(ii);
"Margin" shall have the meaning specified in the
Schedule hereto;
"Nominee" means an agent or a nominee appointed by
either Party and approved (if appropriate)
as such by the Inland Revenue to accept
delivery of, hold or deliver Securities,
Equivalent Securities, Collateral and/or
Equivalent Collateral on its behalf whose
14
<PAGE>
appointment has been notified to the other
Party;
"Non-Defaulting Party" shall have the meaning given in Clause 12;
"Offer Price" in relation to Equivalent Securities or
Equivalent Collateral means the best
available offer price thereof on the most
appropriate market in a standard size;
"Offer Value" Subject to Clause 8(E) means:-
(a) in relation to Collateral
equivalent to Collateral types B
(ix) and C (more specifically
referred to in the Schedule hereto)
the Value thereof as calculated in
accordance with such Schedule; and
(b) in relation to Equivalent
Securities or Collateral equivalent
to all other types of Collateral
(more specifically referred to in
the Schedule hereto) the amount it
would cost to buy such Equivalent
Securities or Equivalent Collateral
at the Offer Price thereof at such
time together with all costs, fees
and expenses that would be incurred
in connection therewith, calculated
on the assumption that the
aggregate thereof is the least that
could reasonably be expected to be
paid in order to carry out the
transaction;
"Parties" means the Lender and the Borrower and
"Party" shall be construed accordingly;
"Performance Date" shall have the meaning given in Clause 8;
"Principal" shall have the meaning given in Clause 14;
"Reference Price" means:
15
<PAGE>
(a) in relation to the valuation of
Securities, Equivalent Securities,
Collateral and/or Collateral
equivalent to types B (ii), (viii),
(xi) and (xii) (more specifically
referred to in the Schedule hereto)
such price as is equal to the mid
market quotation of such
Securities, Equivalent Securities,
Collateral and/or Equivalent
Collateral as derived from a
reputable pricing information
service (such as the services
provided by Reuters, Extel
Statistical Services and Telerate)
reasonably chosen in good faith by
the Lender or if unavailable the
market value thereof as derived
from the prices or rates bid by a
reputable dealer for the relevant
instrument reasonably chosen in
good faith by the Lender, in each
case at Close of Business on the
previous Business Day;
(b) in relation to the valuation of
Collateral and/or Collateral
equivalent to Collateral types A
and B(i) (more specifically
referred to in the Schedule
hereto), the CGO Reference Price of
such Securities, Equivalent
Securities, Collateral and/or
Equivalent Collateral then current
as determined in accordance with
the CGO Rules from time to time in
force.
(c) in relation to the valuation of
Collateral and/or Collateral
equivalent to Collateral types
B(iii), (iv), (v), (vi) (vii) and
(ix), (more specifically referred
to in the Schedule hereto), the
market value thereof as derived
from the rates bid by Barclays Bank
PLC for such instruments or, in the
absence of such a bid, the average
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of the rates bid by two leading
market makers for such instruments
at Close of Business on the
previous Business Day;
"Relevant Payment Date" shall have the meaning given in Clause
4(B)(i);
"Rules" means the rules for the time being of the
Stock Exchange (where either Party is a
member of the Stock Exchange) and/or any
other regulatory authority whose rules and
regulations shall from time to time affect
the activities of the Parties pursuant to
this Agreement including but not limited to
the stocklending regulations and guidance
notes relating to both stocklending and
manufactured interest and dividends for the
time being in force of the Commissioners of
the Inland Revenue and any associated
procedures required pursuant thereto
(PROVIDED THAT in an Event of Default,
where either Party is a member of the Stock
Exchange, the Rules and Regulations of the
Stock Exchange shall prevail);
"Securities" means Overseas Securities as defined in
paragraph 1 (i) of Schedule 23A to the
Income and Corporation Taxes Act 1988 which
the Borrower is entitled to borrow from the
Lender in accordance with the Rules and
which are the subject of a loan pursuant to
this Agreement and such term shall include
the certificates and other documents of
title in respect of the foregoing;
"Settlement Bank" means a settlement member of the CHAPS and
Town Clearing systems who has entered into
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<PAGE>
contractual arrangements with the CGO to
provide Assured Payment facilities for
members of the CGO;
"Settlement Date" means the date upon which Securities are or
are to be transferred to the Borrower in
accordance with this Agreement;
"Stock Exchange" means the London Stock Exchange Limited;
"Value" at any particular time means in respect of
Securities and Equivalent Securities, the
Reference Price thereof then current and in
respect of Collateral and/or Equivalent
Collateral such worth as determined in
accordance with the Schedule hereto.
(B) All headings appear for convenience only and shall not affect the
interpretation hereof.
(C) Notwithstanding the use of expressions such as "borrow", "lend",
"Collateral", "Margin", "redeliver" etc. which are used to reflect
terminology used in the market for transactions of the kind provided for in
this Agreement, title to Securities "borrowed" or "lent" and "Collateral"
provided in accordance with this Agreement shall pass from one Party to
another as provided for in this Agreement, the Party obtaining such title
being obliged to redeliver Equivalent Securities or Equivalent Collateral
as the case may be.
(D) For the purposes of Clauses 6(H)-6(K) and 8(C)-8(E) of this Agreement or
otherwise where a conversion into the Base Currency is required, all
prices, sums or values (including any Value, Offer Value and Bid Value) of
Securities, Equivalent Securities, Collateral or Equivalent Collateral
(including Cash Collateral) stated in currencies other than the Base
Currency shall be converted into the Base Currency at the spot rate of
exchange at the relevant time in the London interbank market for the
purchase of the Base Currency with the currency concerned.
(E) Where at any time there is in existence any other agreement between the
Parties the terms of which make provision for the lending of Securities (as
defined in this Agreement) as well as other securities the terms of this
Agreement shall apply to the lending of such Securities to the exclusion of
any other such agreement.
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<PAGE>
(F) Any reference in this Agreement to an act, regulation, or other legislation
hereunder shall include a reference to any statutory modification or
re-enactment thereof for the time being in force.
2. LOANS OF SECURITIES
(A) The Lender will lend Securities to the Borrower, and the Borrower will
borrow Securities from the Lender in accordance with the terms and
conditions of this Agreement and with the Rules PROVIDED ALWAYS THAT the
Lender shall have received from the Borrower and accepted (by whatever
means) a Borrowing Request.
(B) The Borrower has the right to reduce the amount of Securities referred to
in a Borrowing Request PROVIDED THAT the Borrower has notified the Lender
of such reduction no later than midday London time on the day which is two
Business Days prior to the Settlement Date unless otherwise agreed between
the Parties and the Lender shall have accepted such reduction (by whatever
means).
3. DELIVERY OF SECURITIES
The Lender shall procure the delivery of Securities to the Borrower or deliver
such Securities in accordance with the relevant Borrowing Request TOGETHER WITH
appropriate instruments of transfer duly stamped where necessary and such other
instruments as may be requisite to vest title thereto in the Borrower. Such
Securities shall be deemed to have been delivered by the Lender to the Borrower
on delivery to the Borrower or as it shall direct of the relevant instruments of
transfer, or in the case of Securities held by an agent or a clearing or
settlement system on the effective instructions to such agent or the operator of
such system to hold the Securities absolutely for the Borrower, or by such other
means as may be agreed.
4. RIGHTS AND TITLE
(A) The Parties shall execute and deliver all necessary documents and give all
necessary instructions to procure that all right, title and interest in:
(i) any Securities borrowed pursuant to Clause 2;
(ii) any Equivalent Securities redelivered pursuant to Clause 7;
(iii) any Collateral delivered pursuant to Clause 6;
(iv) any Equivalent Collateral redelivered pursuant to Clauses 6 or 7;
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<PAGE>
shall pass from one Party to the other subject to the terms and
conditions mentioned herein and in accordance with the Rules, on
delivery or redelivery of the same in accordance with this Agreement,
free from all liens, charges and encumbrances. In the case of
Securities, Collateral, Equivalent Securities or Equivalent Collateral
title to which is registered in a computer based system which provides
for the recording and transfer of title to the same by way of book
entries, delivery and transfer of title shall take place in accordance
with the rules and procedures of such system as in force from time to
time. The Party acquiring such right, title and interest shall have no
obligation to return or redeliver any of the assets so acquired but, in
so far as any Securities are borrowed or any Collateral is delivered to
such Party, such Party shall be obliged, subject to the terms of this
Agreement, to redeliver Equivalent Securities or Equivalent Collateral
as appropriate.
(B) (i) Where Income is paid in relation to any Securities on or by
reference to an Income Payment Date on which such Securities
are the subject of a loan hereunder, the Borrower shall, on
the date of the payment of such Income, or on such other date
as the Parties may from time to time agree, (the "Relevant
Payment Date") pay and deliver a sum of money or property
equivalent to the same (with any such endorsements or
assignments as shall be customary and appropriate to effect
the delivery) to the Lender or its Nominee, irrespective of
whether the Borrower received the same. The provisions of
sub-paragraphs (ii) to (v) below shall apply in relation
thereto.
(ii) Subject to sub-paragraph (iii) below, in the case of any
Income comprising a payment, the amount (the "Manufactured
Dividend") payable by the Borrower shall be equal to the
amount of the relevant Income together with an amount
equivalent to any deduction, withholding or payment for or on
account of tax made by the relevant issuer (or on its behalf)
in respect of such Income together with an amount equal to any
other tax credit associated with such Income unless a lesser
amount is agreed between the Parties or an Appropriate Tax
Voucher (together with any further amount which may be agreed
between the Parties to be paid) is provided in lieu of such
deduction, withholding tax credit or payment.
(iii) Where either the Borrower, or any person to whom the Borrower
has on-lent the Securities, is unable to make payment of the
Manufactured Dividend to the Lender without accounting to the
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<PAGE>
Inland Revenue for any amount of relevant tax (as required by
Schedule 23A to the Income and Corporation Taxes Act 1988) the
Borrower shall pay to the Lender or its Nominee, in cash, the
Manufactured Dividend less amounts equal to such tax. The
Borrower shall at the same time if requested supply
Appropriate Tax Vouchers to the Lender.
(iv) Unless otherwise agreed between the Parties as indicated in
the Schedule to this Agreement, if at any time any
Manufactured Dividend falls to be paid and neither of the
Parties is an Approved UK Intermediary or an Approved UK
Collecting Agent, the Borrower shall procure that the payment
is paid through an Approved UK Intermediary or an Approved UK
Collecting Agent agreed by the Parties for this purpose,
unless the rate of relevant withholding tax in respect of any
Income that would have been payable to the Lender but for the
loan of the Securities would have been zero and no income tax
liability under Chapter VIIA of Part IV of the Income and
Corporation Taxes Act 1988 would have arisen in respect
thereof.
(v) In the event of the Borrower failing to remit either directly
or by its Nominee any sum payable pursuant to this Clause, the
Borrower hereby undertakes to pay a rate to the Lender (upon
demand) on the amount due and outstanding at the rate provided
for in Clause 13 hereof. Interest on such sum shall accrue
daily commencing on and inclusive of the third Business Day
after the Relevant Payment Date, unless otherwise agreed
between the Parties.
(vi) Each Party undertakes that where it holds securities of the
same description as any securities borrowed by it or
transferred to it by way of collateral at a time when a right
to vote arises in respect of such securities, it will use its
best endeavors to arrange for the voting rights attached to
such securities to be exercised in accordance with the
instructions of the Lender or Borrower (as the case may be)
PROVIDED ALWAYS THAT each Party shall use its best endeavors
to notify the other of its instructions in writing no later
than seven Business Days prior to the date upon which such
votes are exercisable or as otherwise agreed between the
Parties and that the Party concerned shall not be obliged so
to exercise the votes in respect of a number of Securities
greater than the number so lent or transferred to it. For the
avoidance of doubt the Parties agree that subject as
hereinbefore provided any voting rights attaching to the
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<PAGE>
relevant Securities, Equivalent Securities, Collateral and/or
Equivalent Collateral shall be exercisable by the persons in
whose name they are registered or in the case of Securities,
Equivalent Securities, Collateral and/or Equivalent Collateral
in bearer form, the persons by or on behalf of whom they are
held, and not necessarily by the Borrower or the Lender (as
the case may be).
(vii) Where, in respect of any borrowed Securities or any
Collateral, any rights relating to conversion, sub-division,
consolidation, pre-emption, rights arising under a takeover
offer or other rights, including those requiring election by
the holder for the time being of such Securities or
Collateral, become exercisable prior to the redelivery of
Equivalent Securities or Equivalent Collateral, then the
Lender or Borrower, as the case may be, may, within a
reasonable time before the latest time for the exercise of the
right or option give written notice to the other Party that on
redelivery of Equivalent Securities or Equivalent Collateral,
as the case may be, it wishes to receive Equivalent Securities
or Equivalent Collateral in such form as will arise if the
right is exercised or, in the case of a right which may be
exercised in more than one manner, is exercised as is
specified in such written notice.
(viii) Any payment to be made by the Borrower under this Clause shall
be made in a manner to be agreed between the Parties.
5. RATES
(A) In respect of each loan of Securities, the Borrower shall pay to the
Lender, in the manner prescribed in sub-Clause (C), sums calculated by
applying such rate as shall be agreed between the Parties from time to
time to the daily Value of the relevant Securities.
(B) Where Cash Collateral is deposited with the Lender in respect of any
loan of Securities in circumstances where:
(i) interest is earned by the Lender in respect of such Cash
Collateral and that interest is paid to the Lender without
deduction of tax, the Lender shall pay to the Borrower, in the
manner prescribed in sub-Clause (C), an amount equal to the
gross amount of such interest earned. Any such payment due to
the Borrower may be set-off against any payment due to the
Lender pursuant to sub-Clause (A) hereof if either the
Borrower has warranted to the Lender in this Agreement that it
is subject to tax in the United Kingdom under Case I of
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<PAGE>
Schedule D in respect of any income arising pursuant to or in
connection with the borrowing of Securities hereunder or the
Lender has notified the Borrower of the gross amount of such
interest or income; and
(ii) sub-Clause (B)(i) above does not apply, the Lender shall pay
to the Borrower, in the manner presented in sub-Clause (C),
sums calculated by applying such rates as shall be agreed
between the Parties from time to time to the amount of such
Cash Collateral. Any such payment due to the Borrower may be
set-off against any payment due to the Lender pursuant to
sub-Clause (A) hereof.
(C) In respect of each loan of Securities, the payments referred to in
sub-Clauses (A) and (B) of this Clause shall accrue daily in respect of
the period commencing on and inclusive of the Settlement Day and
terminating on and exclusive of the Business Day upon which Equivalent
Securities are redelivered or Cash Collateral is repaid. Unless
otherwise agreed, the sums so accruing in respect of each calendar
month shall be paid in arrears by the Borrower to the Lender or to the
Borrower by the Lender (as the case may be) not later than the Business
Day which is one week after the last Business Day of the calendar month
to which such payments relate or such other date as the Parties shall
from time to time agree. Any payment made pursuant to sub-Clauses (A)
and (B) hereof shall be in such currency and shall be paid in such
manner and at such place as shall be agreed between the Parties.
6. COLLATERAL
(A) (i) Subject to sub-Clauses (B), (C) and (E) below the Borrower
undertakes to deliver Collateral to the Lender (or in
accordance with the Lender's instructions) TOGETHER WITH
appropriate instruments of transfer duly stamped where
necessary and such other instruments as may be requisite to
vest title thereto in the Lender simultaneously with delivery
of the borrowed Securities and in any event no later than
Close of Business on the Settlement Date. Collateral may be
provided in any of the forms specified in the Schedule hereto
(as agreed between the Parties);
(ii) where Collateral is delivered to the Lender's Nominee any
obligation under this Agreement to redeliver or otherwise
account for Equivalent Collateral shall be an obligation of
the Lender notwithstanding that any such redelivery may be
effected in any particular case by the Nominee.
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<PAGE>
(B) Where CGO Collateral is provided to the Lender or its Nominee by
member-to-member delivery or delivery-by-value in accordance with the
provisions of the CGO Rules from time to time in force, the obligation
of the Lender shall be to redeliver Equivalent Collateral through the
CGO to the Borrower in accordance with this Agreement. Any references,
(howsoever expressed) in this Agreement, the Rules, and/or any other
agreement or communication between the Parties to an obligation to
redeliver such Equivalent Collateral shall be construed accordingly. If
the loan of Securities in respect of which such Collateral was provided
has not been discharged when the Collateral is redelivered, the Assured
Payment obligation generated on such redelivery shall be deemed to
constitute a payment of money which shall be treated as Cash Collateral
until the loan is discharged, or further Equivalent Collateral is
provided later during that Business Day. This procedure shall continue
daily where CGO Collateral is delivered-by-value for as long as the
relevant loan remains outstanding.
(C) Where CGO Collateral or other collateral is provided by
delivery-by-value to a Lender or its Nominee the Borrower may
consolidate such Collateral with other Collateral provided by the same
delivery to a third party for whom the Lender or its Nominee is acting.
(D) Where Collateral is provided by delivery-by-value through an
alternative book entry transfer system, not being the CGO, the
obligation of the Lender shall be to redeliver Equivalent Collateral
through such book entry transfer system in accordance with this
Agreement. If the loan of Securities in respect of which such
Collateral was provided has not been discharged when the Collateral is
redelivered, any payment obligation generated within the book entry
transfer system on such redelivery shall be deemed to constitute a
payment of money which shall be treated as Cash Collateral until the
loan is discharged, or further Equivalent Collateral is provided later
during that Business Day. This procedure shall continue when Collateral
is delivered-by-value for as long as the relevant loan remains
outstanding;
(E) Where Cash Collateral is provided the sum of money so deposited may be
adjusted in accordance with Clause 6(H). Subject to Clause 6(H)(ii),
the Cash Collateral shall be repaid at the same time as Equivalent
Securities in respect of the Securities borrowed are redelivered, and
the Borrower shall not assign, charge, dispose of or otherwise deal
with its rights in respect of the Cash Collateral. If the Borrower
fails to comply with its obligations for such redelivery of Equivalent
Securities the Lender shall have the right to apply the Cash Collateral
by way of set-off in accordance with Clause 8.
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<PAGE>
(F) The Borrower may from time to time call for the repayment of Cash
Collateral or the redelivery of Collateral equivalent to any Collateral
delivered to the Lender prior to the date on which the same would
otherwise have been repayable or redeliverable PROVIDED THAT at the
time of such repayment or redelivery the Borrower shall have delivered
or delivers Alternative Collateral acceptable to the Lender.
(G) (i) Where Collateral (other than Cash Collateral) is delivered in
respect of which any Income may become payable, the Borrower
shall call for the redelivery of Collateral equivalent to such
Collateral in good time to ensure that such Equivalent
Collateral may be delivered prior to any such Income becoming
payable to the Lender, unless in relation to such Collateral
the Parties are satisfied before the relevant Collateral is
transferred that no tax will be payable to the UK Inland
Revenue under Schedule 23A of the Income and Corporation Taxes
Act 1988. At the time of such redelivery the Borrower shall
deliver Alternative Collateral acceptable to the Lender.
(ii) Where the Lender receives any Income in circumstances where
the Parties are satisfied as set out in Clause 6(G)(i) above,
then the Lender shall on the date on which the Lender receives
such Income or on such date as the Parties may from time to
time agree, pay and deliver a sum of money or property
equivalent to such Income (with any such endorsements or
assignments as shall be customary and appropriate to effect
the delivery) to the Borrower and shall supply Appropriate Tax
Vouchers (if any) to the Borrower.
(H) Unless the Schedule to this Agreement indicates that Clause 6(I) shall
apply in lieu of this Clause 6(H), or unless otherwise agreed between
the Parties, the Value of the Collateral delivered to or deposited with
the Lender or its nominated bank or depositary (excluding any
Collateral repaid or redelivered under sub-Clauses (H)(ii) or (I)(ii)
below (as the case may be) ("Posted Collateral")) in respect of any
loan of Securities shall bear from day to day and at any time the same
proportion to the Value of the Securities borrowed under such loan as
the Posted Collateral bore at the commencement of such loan.
Accordingly:
(i) the Value of the Posted Collateral to be delivered or
deposited while the loan of Securities continues shall be
equal to the Value of the borrowed Securities and the Margin
applicable thereto (the "Required Collateral Value");
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<PAGE>
(ii) if on any Business Day the Value of the Posted Collateral in
respect of any loan of Securities exceeds the Required
Collateral Value in respect of such loan, the Lender shall (on
demand) repay such Cash Collateral and/or redeliver to the
Borrower such Equivalent Collateral as will eliminate the
excess; and
(iii) if on any Business Day the Value of the Posted Collateral
falls below the Required Collateral Value, the Borrower shall
provide such further Collateral to the Lender as will
eliminate the deficiency.
(I) Subject to Clause 6(J), unless the Schedule to this Agreement indicates
that Clause 6(H) shall apply in lieu of this Clause 6(I), or unless
otherwise agreed between the Parties:-
(i) the aggregate Value of the Posted Collateral in respect of all
loans of Securities outstanding under this Agreement shall
equal the aggregate of the Required Collateral Values in
respect of such loans;
(ii) if at any time the aggregate Value of the Posted Collateral in
respect of all loans of Securities outstanding under this
Agreement exceeds the aggregate of the Required Collateral
Values in respect of such loans, the Lender shall (on demand)
repay such Cash Collateral and/or redeliver to the Borrower
such Equivalent Collateral as will eliminate the excess;
(iii) if at any time the aggregate Value of the Posted Collateral in
respect of all loans of Securities outstanding under this
Agreement falls below the aggregate of Required Collateral
Values in respect of all such loans, the Borrower shall (on
demand) provide such further Collateral to the Lender as will
eliminate the deficiency.
(J) Where Clause 6(I) applies, unless the Schedule to this Agreement
indicates that this Clause 6(J) does not apply, if a Party (the "first
Party") would, but for this Clause 6(J), be required under Clause 6(I)
to repay Cash Collateral, redeliver Equivalent Securities or provide
further Collateral in circumstances where the other Party (the "second
Party") would, but for this Clause 6(J), also be required to repay Cash
Collateral or provide or redeliver Equivalent Collateral under Clause
6(I), then the Value of the Cash Collateral or Equivalent Collateral
deliverable by the first Party ("X") shall be set-off against the Value
of the Cash Collateral, or Equivalent Collateral or further Collateral
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<PAGE>
deliverable by the second Party ("Y") and the only obligation of the
Parties under Clause 6(I) shall be, where X exceeds Y, an obligation of
the first Party, or where Y exceeds X, an obligation of the second
Party, to repay Cash Collateral, redeliver Equivalent Collateral or to
deliver further Collateral having a Value equal to the difference
between X and Y.
(K) Where Cash Collateral is repaid, Equivalent Collateral is redelivered
or further Collateral is provided by a Party under Clause 6(H), the
Parties shall agree to which loan or loans of Securities such
repayment, redelivery or further provision is to be attributed and
failing agreement it shall be attributed, as determined by the Party
making such repayment, redelivery or further provision to the earliest
outstanding loan and, in the case of a repayment or redelivery up to
the point at which the Value of Collateral in respect of such loan is
reduced to zero and, in the case of a further provision up to the point
at which the Value of the Collateral in respect of such loan equals the
Required Collateral Value in respect of such loan, and then to the next
earliest outstanding loan up to the similar point and so on.
(L) Where any Cash Collateral falls to be repaid or Equivalent Collateral
to be redelivered or further Collateral to be provided under this
Clause 6, it shall be delivered within the minimum period after demand
specified in the Schedule or if no appropriate period is there
specified within the standard settlement time for delivery of the
relevant type of Cash Collateral, Equivalent Collateral or Collateral,
as the case may be.
7. REDELIVERY OF EQUIVALENT SECURITIES
(A) The Borrower undertakes to redeliver Equivalent Securities in
accordance with this Agreement and the terms of the relevant Borrowing
Request. For the avoidance of doubt any reference herein or in any
other agreement or communication between the Parties (howsoever
expressed) to an obligation to redeliver or account for or act in
relation to borrowed Securities shall accordingly be construed as a
reference to an obligation to redeliver or account for or act in
relation to Equivalent Securities.
(B) Subject to Clause 8 hereof and the terms of the relevant Borrowing
Request the Lender may call for the redelivery of all or any Equivalent
Securities at any time by giving notice on any Business Day of not less
than the standard settlement time for such Equivalent Securities on the
exchange or in the clearing organization through which the relevant
borrowed Securities were originally delivered. The Borrower shall as
hereinafter provided redeliver such Equivalent Securities not later
than the expiry of such notice in accordance with the Lender's
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<PAGE>
instructions. Simultaneously with the redelivery of the Equivalent
Securities in accordance with such call, the Lender shall (subject to
Clause 6(I), if applicable) repay any Cash Collateral and redeliver to
the Borrower Collateral equivalent to the Collateral delivered pursuant
to Clause 6 in respect of the borrowed Securities. For the avoidance of
doubt any reference herein or in any other agreement or communication
between the Parties (however expressed) to an obligation to redeliver
or account for or act in relation to Collateral shall accordingly be
construed as a reference to an obligation to redeliver or account for
or act in relation to Equivalent Collateral.
(C) If the Borrower does not redeliver Equivalent Securities in accordance
with such call, the Lender may elect to continue the loan of Securities
PROVIDED THAT if the Lender does not elect to continue the loan the
Lender may by written notice to the Borrower elect to terminate the
relevant loan. Upon the expiry of such notice the provisions of Clauses
(8) (B) to (F) shall apply as if upon the expiry of such notice an
Event of Default had occurred in relation to the Borrower (who shall
thus be the Defaulting Party for the purposes of this Agreement) and as
if the relevant loan were the only loan outstanding.
(D) In the event that as a result of the failure of the Borrower to
redeliver Equivalent Securities to the Lender in accordance with this
Agreement a "buy-in" is exercised against the Lender then provided that
reasonable notice has been given to the Borrower of the likelihood of
such a "buy-in", the Borrower shall account to the Lender for the total
costs and expenses reasonably incurred by the Lender as a result of
such "buy-in".
(E) Subject to the terms of the relevant Borrowing Request, the Borrower
shall be entitled at any time to terminate a particular loan of
Securities and to redeliver all and any Equivalent Securities due and
outstanding to the Lender in accordance with the Lender's instructions.
The Lender shall accept such redelivery and simultaneously therewith
(subject to Clause 6(I) if applicable) shall repay to the Borrower any
Cash Collateral or, as the case may be, redeliver Collateral equivalent
to the Collateral provided by the Borrower pursuant to Clause 6 in
respect thereof.
(F) Where a TALISMAN short term certificate (as described in paragraph C of
the Schedule) is provided by way of Collateral, the obligation to
redeliver Equivalent Collateral is satisfied by the redelivery of the
certificate to the Borrower or its expiry as provided for in the Rules
applying to such certificate.
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(G) Where a Letter of Credit is provided by way of Collateral, the
obligation to redeliver Equivalent Collateral is satisfied by the
Lender redelivering for cancellation the Letter of Credit so provided,
or where the Letter of Credit is provided in respect of more than one
loan, by the Lender consenting to a reduction in the value of the
Letter of Credit.
8. SET-OFF ETC.
(A) On the date and time (the "Performance Date") that Equivalent
Securities are required to be redelivered by the Borrower in accordance
with the provisions of this Agreement the Lender shall simultaneously
redeliver the Equivalent Collateral and repay any Cash Collateral held
(in respect of the Equivalent Securities to be redelivered) to the
Borrower. Neither Party shall be obliged to make delivery (or make a
payment as the case may be) to the other unless it is satisfied that
the other Party will make such delivery (or make an appropriate payment
as the case may be) to it simultaneously. If it is not so satisfied
(whether because an Event of Default has occurred in respect of the
other Party or otherwise) it shall notify the other party and unless
that other Party has made arrangements which are sufficient to assure
full delivery (or the appropriate payment as the case may be) to the
notifying Party, the notifying Party shall (provided it is itself in a
position, and willing, to perform its own obligations) be entitled to
withhold delivery (or payment, as the case may be) to the other Party.
(B) If an Event of Default occurs in relation to either Party, the Parties'
delivery and payment obligations (and any other obligations they have
under this Agreement) shall be accelerated so as to require performance
thereof at the time such Event of Default occurs (the date of which
shall be the "Performance Date" for the purposes of this clause) and in
such event:
(i) the Relevant Value of the Securities to be delivered (or
payment to be made, as the case may be) by each Party shall be
established in accordance with Clause 8(C); and
(ii) on the basis of the Relevant Values so established, an account
shall be taken (as at the Performance Date) of what is due
from each Party to the other and (on the basis that each
Party's claim against the other in respect of delivery of
Equivalent Securities or Equivalent Collateral or any cash
payment equals the Relevant Value thereof) the sums due from
one Party shall be set-off against the sums due from the other
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<PAGE>
and only the balance of the account shall be payable (by the
Party having the claim valued at the lower amount pursuant to
the foregoing) and such balance shall be payable on the
Performance Date.
(C) For the purposes of Clause 8(B) the Relevant Value:-
(i) of any cash payment obligation shall equal its par value
(disregarding any amount taken into account under (ii) or
(iii) below);
(ii) of any securities to be delivered by the Defaulting Party
shall, subject to Clause 8(E) below, equal the Offer Value
thereof; and
(iii) of any securities to be delivered to the Defaulting Party
shall, subject to Clause 8(E) below, equal the Bid Value
thereof.
(D) For the purposes of Clause 8(C), but subject to Clause 8(E) below, the
Bid Value and Offer Value of any securities shall be calculated as at
the Close of Business in the most appropriate market for securities of
the relevant description (as determined by the Non-Defaulting Party) on
the first Business Day following the Performance Date, or if the
relevant Event of Default occurs outside the normal business hours of
such market, on the second Business Day following the Performance Date
(the "Default Valuation Time");
(E) (i) Where the Non-Defaulting Party has following the occurrence of
an Event of Default but prior to the Default Valuation Time
purchased securities forming part of the same issue and being
of an identical type and description to those to be delivered
by the Defaulting Party and in substantially the same amount
as those securities or sold securities forming part of the
same issue and being of an identical type and description to
those to be delivered by him to the Defaulting Party and in
substantially the same amount as those securities, the cost of
such purchase or the proceeds of such sale, as the case may
be, (taking into account all reasonable costs, fees and
expenses that would be incurred in connection therewith) shall
be treated as the Offer Value or Bid Value, as the case may
be, of the relevant securities for the purposes of this Clause
8.
(ii) Where the amount of any securities sold or purchased as
mentioned in (E)(i) above is not in substantially the same
amount as those securities to be valued for the purposes
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Clause 8(C) the Offer Value or the Bid Value (as the case may
be) of those securities shall be ascertained by dividing the
net proceeds of sale or cost of purchase by the amount of the
securities sold or purchased so as to obtain a net unit price
and multiplying that net unit price by the amount of the
securities to be valued.
(F) Any reference in this Clause 8 to securities shall include any asset
other than cash provided by way of Collateral.
(G) If the Borrower or the Lender for any reason fail to comply with their
respective obligations under Clauses 6(F) or 6(G) in respect of
redelivery of Equivalent Collateral or repayment of Cash Collateral
such failure shall be an Event of Default for the purposes of this
Clause 8, and the person failing to comply shall thus be the Defaulting
Party.
(H) Subject to and without prejudice to its rights under Clause 8(A) either
Party may from time to time in accordance with market practice and in
recognition of the practical difficulties in arranging simultaneous
delivery of Securities, Collateral and cash transfers waive its right
under this Agreement in respect of simultaneous delivery and/or payment
PROVIDED THAT no such waiver in respect of one transaction shall bind
it in respect of any other transaction.
9. TAXATION
(A) The Borrower hereby undertakes promptly to pay and account for any
transfer or similar duties or taxes chargeable in connection with any
transaction effected pursuant to or contemplated by this Agreement, and
shall indemnify and keep indemnified the Lender against any liability
arising in respect thereof as a result of the Borrower's failure to do
so.
(B) A Party undertakes to notify the other Party if it becomes or ceases to
be an Approved UK Intermediary or an Approved UK Collecting Agent.
10. LENDER'S WARRANTIES
Each Party hereby warrants and undertakes to the other on a continuing
basis to the intent that such warranties shall survive the completion
of any transaction contemplated herein that, where acting as a Lender:
(A) it is duly authorised and empowered to perform its duties and
obligations under this Agreement;
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<PAGE>
(B) it is not restricted under the terms of its constitution or in any
other manner from lending Securities in accordance with this Agreement
or from otherwise performing its obligations hereunder;
(C) it is absolutely entitled to pass full legal and beneficial ownership
of all Securities provided by it hereunder to the Borrower free from
all liens, charges and encumbrances;
(D) where the Schedule to this Agreement specifies that this Clause 10(D)
applies, it is not resident in the United Kingdom for tax purposes and
either is not carrying on a trade in the United Kingdom through a
branch or agency or if it is carrying on such a trade the loan is not
entered into in the course of the business of such branch or agency,
and it has (i) delivered or caused to be delivered to the Borrower a
duly completed and certified Certificate (MOD2) or a photocopy thereof
bearing an Inland Revenue acknowledgment and unique number and such
Certificate or photocopy remains valid or (ii) has taken all necessary
steps to enable a specific authorization to make gross payment of the
Manufactured Dividend to be issued by the Inland Revenue;
11. BORROWER'S WARRANTIES
Each Party hereby warrants and undertakes to the other on a continuing basis to
the intent that such warranties shall survive the completion of any transaction
contemplated herein that, where acting as a Borrower:
(A) it has all necessary licenses and approvals, and is duly authorised and
empowered, to perform its duties and obligations under this Agreement
and will do nothing prejudicial to the continuation of such
authorization, licences or approvals;
(B) it is not restricted under the terms of its constitution or in any
other manner from borrowing Securities in accordance with this
Agreement or from otherwise performing its obligations hereunder;
(C) it is absolutely entitled to pass full legal and beneficial ownership
of all Collateral provided by it hereunder to the Lender free from all
liens, charges and encumbrances;
(D) it is acting as principal in respect of this Agreement;
(E) where the Schedule to this Agreement specifies this Clause 11(E)
applies, it is subject to tax in the United Kingdom under Case I of
32
Schedule D in respect of any income arising pursuant to or in
connection with the borrowing of Securities hereunder.
12. EVENTS OF DEFAULT
Each of the following events occurring in relation to either Party (the
"Defaulting Party", the other Party being the "Non-Defaulting Party") shall be
an Event of Default for the purpose of Clause 8:-
(A) the Borrower or Lender failing to pay or repay Cash Collateral or
deliver or redeliver Collateral or Equivalent Collateral upon the due
date, and the Non-Defaulting Party serves written notice on the
Defaulting Party;
(B) the Lender or Borrower failing to comply with its obligations under
Clause 6, and the Non-Defaulting Party serves written notice on the
Defaulting Party;
(C) the Borrower failing to comply with Clause 4(B)(i), (ii) or (iii)
hereof, and the Non-Defaulting Party serves written notice on the
Defaulting Party;
(D) an Act of Insolvency occurring with respect to the Lender or the
Borrower and (except in the case of an Act of Insolvency which is the
presentation of a petition for winding up or any analogous proceeding
or the appointment of a liquidator or analogous officer of the
Defaulting Party in which case no such notice shall be required) the
Non-Defaulting Party serves written notice on the Defaulting Party;
(E) any representations or warranties made by the Lender or the Borrower
being incorrect or untrue in any material respect when made or repeated
or deemed to have been made or repeated, and the Non-Defaulting Party
serves written notice on the Defaulting Party;
(F) the Lender or the Borrower admitting to the other that it is unable to,
or it intends not to, perform any of its obligations hereunder and/or
in respect of any loan hereunder, and the Non-Defaulting Party serves
written notice on the Defaulting Party;
(G) the Lender (if appropriate) or the Borrower being declared in default
by the appropriate authority under the Rules or being suspended or
expelled from membership of or participation in any securities exchange
or association or other self-regulatory organization, or suspended from
dealing in securities by any government agency, and the Non-Defaulting
Party serves written notice on the Defaulting Party;
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<PAGE>
(H) any of the assets of the Lender or the Borrower or the assets of
investors held by or to the order of the Lender or the Borrower being
transferred or ordered to be transferred to a trustee by a regulatory
authority pursuant to any securities regulating legislation and the
Non-Defaulting Party serves written notice on the Defaulting Party, or
(I) the Lender or the Borrower failing to perform any other of its
obligations hereunder and not remedying such failure within 30 days
after the Non-Defaulting Party serves written notice requiring it to
remedy such failure, and the Non-Defaulting Party serves a further
written notice on the Defaulting Party.
Each Party shall notify the other if an Event of Default occurs in relation to
it.
13. OUTSTANDING PAYMENTS
In the event of either Party failing to remit either directly or by its Nominee
sums in accordance with this Agreement such Party hereby undertakes to pay a
rate to the other Party upon demand on the net balance due and outstanding of 1%
above the Barclays Bank PLC base rate from time to time in force.
14. TRANSACTIONS ENTERED INTO AS AGENT
(A) Subject to the following provisions of this Clause, the Lender may
enter into loans as agent (in such capacity, the "Agent") for a third
person (a "Principal"), whether as custodian or investment manager or
otherwise (a loan so entered into being referred to in this clause as
an "Agency Transaction").
(B) A Lender may enter into an Agency Transaction if, but only if:-
(i) if specifies that loan as an Agency Transaction at the time
when it enters into it;
(ii) it enters into that loan on behalf of a single Principal whose
identity is disclosed to the Borrower (whether by name or by
reference to a code or identifier which the Parties have
agreed will be used to refer to a specified Principal) at the
time when it enters into the loan; and
(iii) it has at the time when the loan is entered into actual
authority to enter into the loan and to perform on behalf of
34
<PAGE>
that Principal all of that Principal's obligations under the
agreement referred to in (D)(ii) below.
(C) The Lender undertakes that, if it enters as agent into an Agency
Transaction, forthwith upon becoming aware:-
(i) of any event which constitutes an Act of Insolvency with
respect to the relevant Principal; or
(ii) of any breach of any of the warranties given in Clause 14(E)
below or of any event or circumstance which has the result
that any such warranty would be untrue if repeated by
reference to the current facts;
it will inform the Borrower of that fact and will, if so required by
the Borrower, furnish it with such additional information as it may
reasonably request.
(D) (i) Each Agency Transaction shall be a transaction between the
relevant Principal and the Borrower and no person other than
the relevant Principal and the Borrower shall be a party to or
have any rights or obligations under an Agency Transaction.
Without limiting the foregoing, the Lender shall not be liable
as principal for the performance of an Agency Transaction or
for breach of any warranty contained in Clause 10(D) or 11(E)
of this Agreement, but this is without prejudice to any
liability of the Lender under any other provision of this
Clause.
(ii) All the provisions of the Agreement shall apply separately as
between the Borrower and each Principal for whom the Agent has
entered into an Agency transaction or Agency Transactions as
if each such Principal were a party to a separate agreement
with the Borrower in all respects identical with this
Agreement other than this paragraph and as if the Principal
were Lender in respect of that agreement.
PROVIDED THAT
if there occurs in relation to the Agent an Event of Default
or an event which would constitute an Event of Default if the
Borrower served written notice under any sub-Clause of Clause
12, the Borrower shall be entitled by giving written notice to
the Principal (which notice shall be validly given if given to
35
<PAGE>
the Lender in accordance with Clause 20) to declare that by
reason of that event an Event of Default is to be treated as
occurring in relation to the Principal. If the Borrower gives
such a notice then an Event of Default shall be treated as
occurring in relation to the Principal at the time when the
notice is deemed to be given; and
if the Principal is neither incorporated nor has established a
place of business in Great Britain, the Principal shall for
the purposes of the agreement referred to in (D)(ii) be deemed
to have appointed as its agent to receive on its behalf
service of process in the courts of England the Agent, or if
the Agent is neither incorporated nor has established a place
of business in the United Kingdom, the person appointed by the
Agent for the purposes of this Agreement, or such other person
as the Principal may from time to time specify in a written
notice given to the other party.
(iii) The foregoing provisions of this Clause do not affect the
operation of the Agreement as between the Borrower and the
Lender in respect of any transactions into which the Lender
may enter on its own account as principal.
(E) The Lender warrants to the Borrower that it will, on every occasion on
which it enters or purports to enter into a transaction as an Agency
Transaction, have been duly authorised to enter into that loan and
perform the obligations arising thereunder on behalf of the person whom
it specifies as the Principal in respect of that transaction and to
perform on behalf of that person all the obligations of that person
under the agreement referred to in (D)(ii).
15. TERMINATION OF COURSE OF DEALINGS BY NOTICE
Each Party shall have the right to bring the course of dealing contemplated
under this Agreement to an end by giving not less than 15 Business Days' notice
in writing to the other Party (which notice shall specify the date of
termination) subject to an obligation to ensure that all loans and which have
been entered into but not discharged at the time such notice is given are duly
discharged in accordance with this Agreement and with the Rules.
16. GOVERNING PRACTICES
The Borrower shall use its best endeavors to notify the Lender (in writing) of
any changes in legislation or practices governing or affecting the Lender's
36
<PAGE>
rights or obligations under this Agreement or the treatment of transactions
effected pursuant to or contemplated by this Agreement.
17. OBSERVANCE OF PROCEDURES
Each of the Parties hereto agrees that in taking any action that may be required
in accordance with this Agreement it shall observe strictly the procedures and
timetable applied by the Rules and, further, shall observe strictly any
agreement (oral or otherwise) as to the time for delivery or redelivery of any
money, Securities, Equivalent Securities, Collateral or Equivalent Collateral
entered into pursuant to this Agreement.
18. SEVERANCE
If any provision of this Agreement is declared by any judicial or other
competent authority to be void or otherwise unenforceable, that provision shall
be severed from the Agreement and the remaining provisions of this Agreement
shall remain in full force and effect. The Agreement shall, however, thereafter
be amended by the Parties in such reasonable manner so as to achieve, without
illegality, the intention of the Parties with respect to that severed provision.
19. SPECIFIC PERFORMANCE
Each Party agrees that in relation to legal proceedings it will not seek
specific performance of the other Party's obligation to deliver or redeliver
Securities, Equivalent Securities, Collateral or Equivalent Collateral but
without prejudice to any other rights it may have.
20. NOTICES
All notices issued under this Agreement shall be in writing (which shall include
telex or facsimile messages) and shall be deemed validly delivered if sent by
prepaid first class post to or left at the addresses or sent to the telex or
facsimile number of the Parties respectively or such other addresses or telex or
facsimile numbers as each Party may notify in writing to the other.
21. ASSIGNMENT
Neither Party may charge assign or transfer all or any of its rights or
obligations hereunder without the prior consent of the other Party.
22. NON-WAIVER
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No failure or delay by either Party to exercise any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise of any right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege as herein
provided.
23. ARBITRATION AND JURISDICTION
(A) All claims, disputes and matters of conflict between the Parties
arising hereunder shall be referred to or submitted for arbitration in
London in accordance with English Law before a sole arbitrator to be
agreed between the Parties or in default of agreement by an arbitrator
to be nominated by the Chairman of The Stock Exchange on the
application of either Party, and this Agreement shall be deemed for
this purpose to be a submission to arbitration within the Arbitration
Acts 1950 and 1979, or any statutory modification or re-enactment
thereof for the time being in force.
(B) This Clause shall take effect notwithstanding the frustration or other
termination of this Agreement.
(C) No action shall be brought upon any issue between the Parties under or
in connection with this Agreement until the same has been submitted to
arbitration pursuant hereto and an award made.
24. TIME
Time shall be of the essence of the Agreement.
25. RECORDING
The Parties agree that each may electronically record all telephonic
conversations between them.
26. GOVERNING LAW
This Agreement is governed by, and shall be construed in accordance with,
English Law.
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<PAGE>
IN WITNESS WHEREOF this Agreement has been executed on behalf of the
Parties hereto the day and year first before written.
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
By: _______________________
Name:
Title:
BAKER COMMUNICATIONS FUND L.P.
By: Baker Capital Partners, LLC
Name: _______________
Title: ________________
39
<PAGE>
SCHEDULE
________
BASE CURRENCY
The Base Currency applicable to this Agreement is United States Dollars, unless
otherwise agreed.
LENDER'S WARRANTIES
Where Morgan Stanley & Co. International Limited is Lender, Clause 10(D) shall
not apply.
BORROWER'S WARRANTIES
Where Morgan Stanley & Co. International Limited is Borrower, Clause 11(E) shall
apply.
40
<PAGE>
Annex I to Overseas Securities Lender's Agreement
Dated as of April 19, 2000
Supplemental Terms and Conditions
Pursuant to the terms of the Overseas Securities Lender's Agreement
(the "Agreement") between Baker Communications Fund L.P. (the "Counterparty")
for itself or for itself and on behalf of any Accounts (each an "Account")
identified in the Agreement or annexes thereto and Morgan Stanley & Co.
International Limited ("MSIL") dated as of April 19, 2000, the parties agree
that Loans shall be governed by the Supplemental Terms and Conditions (the
"Supplement") stated herein, which Supplement shall be incorporated into the
Agreement and be deemed a part thereof. The Counterparty and MSIL are
collectively referred to herein as the "Parties." The Parties are supplementing
the Agreement in order to appoint Morgan Stanley & Co. Incorporated ("MS&Co."),
a broker and dealer registered under the United States Securities Exchange Act
of 1934, as amended (the "1934 Act"), agent for the Parties in accordance with
the terms hereof.
1. Subject to Section 5 hereof, the Agreement is amended to the extent
required so that MS&Co. shall accept delivery of Securities for the
Counterparty from MSIL upon entering into a Loan in which MSIL is the
Lender or shall accept delivery of Collateral from MSIL for the
Counterparty upon entering into a Loan in which MSIL is the Borrower.
2. Subject to Section 5 hereof, the Agreement is amended to the extent
required so that, upon the termination of a Loan, MS&Co. shall accept
delivery of the Collateral for the Counterparty for a Loan in which
MSIL was the Lender or MS&Co. shall accept delivery of the Securities
from MSIL in a Loan in which MSIL was the Borrower.
3. MS&Co., as agent, agrees that, upon receipt of the Securities or the
Collateral, as the case may be, from MSIL, it shall, as agent, transfer
the Securities or the Collateral, as the case may be, to the
Counterparty against delivery of the Collateral or the Securities, as
the case may be.
4. The Parties agree that the transfer of the Securities and Collateral to
MS&Co. shall happen simultaneously and that MS&Co. shall not be
obligated to transfer Securities or Collateral if the other Party fails
<PAGE>
to deliver Collateral or Securities, as the case may be, nor shall it
be obligated to provide Securities or Collateral if it does not receive
these.
5. Effecting Loans. The Parties agree that any Loan between MSIL and the
Counterparty must be effected through MS&Co., as agent for MSIL and the
Counterparty. MS&Co. shall be responsible for operational aspects of
the Loan, such as recordkeeping, reporting, clearance and settlement
and shall be responsible for confirming the Loan to the Counterparty;
provided, however, the Parties agree that MS&Co. need not be
responsible for the settlement and clearance of a Loan if (i) the
securities lending transaction involves foreign securities or U.S.
government securities; (ii) MSIL is not acting as a custodian for
Counterparty's funds or securities and (iii) MSIL is not in default to
any counterparty on any material financial market transaction. For
purposes of this Supplement, a "foreign security" shall mean (x) a
security issued by an issuer not organized or incorporated under the
laws of the United States when the transaction in such security is not
effected on a U.S. securities exchange or through Nasdaq or (y) a debt
security (including a convertible debt security) issued by an issuer
organized or incorporated in the United States in connection with a
distribution conducted outside the United States. MSIL hereby agrees to
make all clearance and settlement information relating to any foreign
or U.S. government securities that are settled through MSIL available
to MS&Co.
6. MS&Co. as Custodian for the Collateral. In the event Lender does not
take delivery of the Collateral and the Counterparty is the Lender:
(a) MS&Co. shall maintain the Collateral in a segregated account
to the order of the Lender, hereinafter referred to as the
"Custody Account." The Counterparty hereby authorizes MS&Co.
to lend the Collateral either to itself or to others, together
with all attendant rights of ownership. The Collateral,
together with all attendant rights of ownership, may also be
pledged, repledged, hypothecated or rehypothecated either
separately or in common with other property in accordance with
Rule 15c3-3 of the 1934 Act.
(b) MS&Co. shall not subject the Collateral to any other right,
charge, security interest, lien, claim or encumbrance in favor
of any party or any person claiming through MS&Co. which is
superior to Lender's interest.
(c) MS&Co. may not release the Collateral to the Borrower without
the prior written consent of Lender.
(d) In the event of Default by the Lender as defined in Clause 12
of the Agreement, MS&Co. shall deliver the Collateral to
Borrower upon written notice from Lender. MS&Co. shall not be
<PAGE>
required to make any determination as to whether any such
delivery is made in accordance with the provisions of the
Agreement.
7. Status of MS&Co.
(a) MS&Co. has no obligation, by guarantee, endorsement or
otherwise, with respect to performance of MSIL's obligations
to the Counterparty, nor with respect to performance of the
Counterparty's obligations to MSIL. Unless otherwise agreed,
MS&Co. will not extend credit to finance any Loan.
(b) MS&Co.'s sole role in Loans underlying the Agreement and this
Supplement is as an agent of MSIL and the Counterparty, on a
disclosed basis, to hold Collateral (if requested) on behalf
of Lender and to perform only the duties enumerated herein.
(c) Notwithstanding anything herein to the contrary, MS&Co. shall
not have any obligation or liability to Lender or Borrower
with respect to monitoring of the Value of Securities given as
Collateral pursuant to the Agreement.
8. Submission to Jurisdiction
(a) Notwithstanding anything to the contrary contained in Section
24 of the Agreement, any legal action or proceeding with
respect to any Loan, the Agreement or this Supplement shall be
brought in the courts of the State of New York or of the
United States of America for the Southern District of New
York, and, by execution and delivery of this Agreement, the
Counterparty on behalf of itself and each Account (if
applicable) hereby accepts for itself and for each Account (if
applicable) and in respect of its property and the property of
each Account (if applicable), generally and unconditionally,
the jurisdiction of the aforesaid courts. The parties hereto
hereby irrevocably waive trial by jury, and the Counterparty,
on behalf of itself and each Account (if applicable), hereby
irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action or
proceeding in such respective jurisdiction.
(b) The Counterparty hereby is authorized to and hereby
irrevocably designates itself, located at c/o Baker Capital
Corp., 540 Madison Avenue, New York, New York 10022, United
States, as the designee, appointee and agent of the
Counterparty and each Account (if applicable) to receive, for
<PAGE>
and on behalf of the Counterparty and each Account (if
applicable), service of process in any legal action or
proceeding with respect to any Loan, the Agreement or this
Supplement. The Counterparty further irrevocably consents to
the service of process of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, to the
Counterparty at its said address, such service to become
effective 30 days after such mailing.
(c) MSIL hereby irrevocably designates MS&Co., located at 1585
Broadway, New York, New York 10036, as the designee, appointee
and agent of MSIL to receive, for and on behalf of MSIL,
service of process in any legal action or proceeding with
respect to any Loan, the Agreement, and this Supplement. It is
understood that a copy of such process served on such agent
will be promptly forwarded by mail to MSIL at its address for
notices, but the failure of MSIL to receive such copy shall
not affect in any way the service of such process. MSIL
further irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified
mail, postage prepaid, to MSIL at its said address, such
service to become effective 30 days after such mailing.
9. Appointment of Agent. Each Party appoints MS&Co. to act as the agent
with regard to any and all actions necessary to effect Loans as
described in this Supplement.
10. Acknowledgment of Agent's Appointment. MS&Co. acknowledges and agrees
to its appointment as agent for the Counterparty and MSIL to effect
Loans as described in this Supplement.
11. Counterparty Representations and Warranties. In addition to the
representations and warranties in the Agreement, the Counterparty
represents and warrants at the time it enters into a Loan the
following:
(a) It is a major U.S. institutional investor or U.S.
institutional investor pursuant to Rule 15a-6 of the 1934 Act
and any no action letters issued pursuant thereto. A "U.S.
institutional investor" is defined as an investment company
registered with the United States Securities and Exchange
Commission under Section 8 of the United States Investment
Company Act of 1940; a bank, savings and loan association,
insurance company, business development company, small
business investment company or employee benefit plan defined
in Rule 501(a)(1) of Regulation D under the United States
Securities Act of 1933 (the "1933 Act"); a private business
development company defined in Rule 501(a)(2) of Regulation D
<PAGE>
of the 1933 Act; an organization described in Section
501(c)(3) of the United States Internal Revenue Code, as
defined in Rule 501(a)(3) of Regulation D of the 1933 Act or a
trust defined in Rule 501(a)(7) of Regulation D of the 1933
Act. A "major U.S. institutional investor" is defined as (i) a
U.S. institutional investor that has, or has under management,
total assets in excess of $100 million; provided, however,
that for purposes of determining the total assets of an
investment company under this rule, the investment company may
include the assets of any family of investment companies of
which it is a part, (ii) an investment adviser registered
under the Investment Advisers Act of 1940 that has total
assets under management in excess of $100 million or (iii) any
entity, including any investment adviser (whether or not
registered under the Investment Advisers Act), that owns or
controls (or, in the case of an investment adviser, has under
management) in excess of $100 million in aggregate financial
assets (i.e., cash, money-market instruments, securities of
unaffiliated issuers, futures and options on futures and other
derivative instruments); and/or
(b) It is a Qualified Institutional Buyer as defined in Rule 144A
under the 1933 Act.
(c) Counterparty further represents and warrants throughout the
term of the Agreement that it is duly authorized to act on its
behalf in connection with this Supplement and if Counterparty
is acting on behalf of Accounts, it represents and warrants
that it is duly authorized to act on behalf of such Account.
12. Hold Harmless. The Parties acknowledge that MS&Co. is acting as an
agent and the Parties agree to hold MS&Co. harmless from all liability
except for losses caused by MS&Co.'s gross negligence or willful
misconduct.
13. Governing Law. This Supplement shall be governed by and construed in
accordance with the laws of the State of New York, without giving
effect to choice or conflict of law doctrine.
14. Counterparts. This Supplement may be executed in counterparts, each of
which shall be deemed an original.
15. Conflicts. If there is any conflict between the terms of this
Supplement and the Agreement, the terms of this Supplement shall
govern.
<PAGE>
All terms used herein and not otherwise defined shall have the meaning assigned
to them in the Agreement.
BAKER COMMUNICATIONS MORGAN STANLEY & CO.
FUND, L.P. INTERNATIONAL LIMITED
For Itself or for Itself and on behalf
of each Account
By: Baker Capital Partners LLC By:___________________________
Name: __________________ Name: __________________
Title: _____________ Title: ___________________
Accepted and Agreed:
MORGAN STANLEY & CO.
INCORPORATED, as Agent
By:___________________________
Name: _________________
Title: __________________
<PAGE>
Annex II to Overseas Securities Lender's Agreement
Notwithstanding any other provisions in the Overseas Securities
Lender's Agreement dated April 19, 2000 between these parties (the "Agreement"),
including Annex I to Overseas Securities Lender's Agreement ("Annex I"), the
terms and provisions of this Annex II supersede any terms and provisions in the
Agreement or Annex I that are inconsistent with terms and provisions of this
Annex II.
General Terms:
Issuer of Security: QS Communications AG
SEDOL: 5944318
Borrowing Request: April 20, 2000
Settlement Date: April 25, 2000
Quantity: Up to 3,030,000 shares of common stock
Collateral: Cash or U.S. governmental securities with a fair
market value on each business day at least equal
to the fair market value of the borrowed
securities at the close of business on the
preceding business day, as further described in
Clause 6(H) of the Agreement. For purposes of
Clause 6(H), the Margin shall be zero.
Interest Rate: None
Distributions with respect If a dividend or other distribution is made with
to Borrowed Securities respect to the borrowed securities during the
lending period, the Borrower shall make a
payment to the Lender of an amount equivalent to
all such dividends or distributions which the
owner of such securities is entitled receive
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Re-delivery Date: May 18, 2000 on which date the Borrower shall
return identical securities to those which were
lent; provided, however, that the Lender may
terminate this securities loan at any time upon
five business days notice, in which case the
Borrower must return to the Lender identical
securities. For these purposes, identical
securities means securities of the same class and
issue as the securities lent to the Borrower. In
the event of a reorganization, recapitalization or
merger of the issuer of the securities during the
term of the loan, the Borrower will return
equivalent securities.
Lender's Warranties: The warranty of the Lender contained in Clause
10(C) of the Agreement is subject to the lock-up
agreements entered into by the Lender in
connection with the initial public offering of the
common stock of QS Communications AG.
The parties agree that Morgan Stanley & Co. International Limited shall
reimburse you for any reasonable expenses incurred in connection with the
entering into, and the implementation of, the Agreement up to an amount
equivalent to 0.50% of the value of the borrowed securities (market-to-market on
every business day until re-delivery date.
The Agreement, as modified by Annex I and Annex II, is intended to comply with
the requirements of Sections 512(a)(5)(B) and 1058(b) of the Internal Revenue
Code of 1986, as amended, and any provisions contained therein are to be
construed accordingly.
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IN WITNESS WHEREOF this Agreement has been executed on behalf of the Parties
the day and year first above written.
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
By:
Name:
Title:
Baker Communications Fund, L.P.
By: Baker Capital Partners, LLC
Name:
Title:
