Exhibit 6
(Exhibit A)
[QCS Letterhead]
June 17, 1998
Dear Series A Investors:
This letter sets forth the terms of an agreement in principle
between QCS Corporation (the "Corporation") and the holders (the "Series A
Investors") of Series A Preferred Stock (the "Series A Preferred Stock") of the
Corporation which would be acceptable to the undersigned in connection with a
proposed recapitalization (the "Recapitalization") of the Corporation. This
letter follows preliminary discussions between the Corporation and the Series A
Investors during which it was concluded that it is desirable for both the Series
A Investors and the Corporation to enter into this agreement in principle, which
is intended to be binding on the parties to the extent of the terms hereof, for
the purpose of simplifying the Corporation's capital structure.
Each undersigned Series A Investor (the "Holder") agrees that
such Holder will participate in a Recapitalization and enter into such
additional legally binding agreements and shareholder consents and approvals as
may be required and which shall be reasonably acceptable to such Holder. The
Recapitalization that each Holder agrees to participate in shall provide for the
following:
1. Restructuring of Series A Dividend. The Corporation and the
Series A Investors shall take all necessary action to
eliminate the dividend on the Series A Preferred Stock and
all rights to receive the accrued dividend as indicated on
the Corporations' financial statements for periods up to
and including the closing of the Recapitalization shall be
waived by the Series A Investors. In place of the dividend,
the Series A Investors shall be issued, on a pro-rata
basis, shares of preferred stock of the Corporation. The
shares of preferred stock issued pursuant to this right
should rank pari passu with the Series A Preferred Stock
and have the same voting and other rights as the Series A
Preferred Stock. The number of shares that the Series A
Investors will be entitled to purchase shall be determined
by dividing (a) the accrued dividend as of the date of
closing of the Recapitalization by (b) 66 2/3 % of the
average of the bid and ask prices of the Corporation's
common stock for the twenty (20) trading days prior to the
closing of the Recapitalization as reported on the
Over-The-Counter Bulletin Board reporting system (the
"Average Price"). In addition, the Corporation shall
provide registration rights for such purchased shares of
preferred stock on terms no less favorable than the
registration rights currently provided to the Series A
Investors;
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2. Indemnification; Payment of Costs. The Corporation shall
indemnify each Holder and hold it harmless from any
liability, damages, claims, losses, penalties, costs or
expense incurred by such Holder in connection with, or as a
result of, the Recapitalization. The foregoing
indemnification shall not apply to any taxes which may be
payable by Xxxxxx as a result of the Recapitalization and
Xxxxxx's legal fees and expenses incurred in the course of
the negotiation and preparation of any documentation
required in connection with the Recapitalization; and
3. Compliance With Laws. The Corporation shall take all
necessary actions to ensure that the Recapitalization is in
compliance with all laws, rules and regulations applicable
to the Corporation or a Holder. Upon request of a Holder,
the Corporation shall provide a Holder with an opinion of
counsel that the Recapitalization has been consummated in
compliance with all applicable laws as well as to any other
matters reasonably requested by such Xxxxxx.
Each Holder understands that the Corporation is in the process
of obtaining similar letters to be executed by the holders of 80% or more of the
Series A Preferred Stock. In the event that the Corporation obtains letters
executed by holders of 80% or more of the Series A Preferred Stock, the
Corporation shall provide prompt notice thereof to each Holder and this
Agreement shall be binding on each Holder through June 30, 1998. In the event an
80% agreement is not obtained by the Corporation on or before June 30, 1998,
then this agreement shall automatically terminate with no further action on the
party of either party being required and shall be of no further force or effect.
This letter supersedes prior discussions and agreements of the
parties relating to the subject matter hereof. The terms hereof may only be
amended by a writing executed by the Corporation and each Series A Investor.
If you are in agreement with the foregoing, please so indicate
by signing below and returning one signed copy of this letter to the
undersigned.
Sincerely,
QCS CORPORATION
/s/ Xxxxxx xxx Xxxxxxxxx
Xxxxxx xxx Xxxxxxxxx
Chairman of the Board
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