INFINITY INVESTORS, LTD.
SEACREST CAPITAL LIMITED
27 Wellington Road
Cork, Ireland
July 31, 1996
VIA FACSIMILE - 441/292-5560
Intelect Communications Systems Limited
Reid House, 31 Church Street
Hamilton, Bermuda
Attention: Peter G. Leighton
Re: Amendment of Convertible Securities Agreement and
Debentures Issued Thereunder
Gentlemen:
Reference is hereby made to that certain Convertible Securities
Agreement of Intelect Communications Systems Limited dated June 7, 1996 (the
"Subscription Agreement") by and among Intelect Communications Systems Limited
("Intelect"), Infinity Investors, Ltd. ("Infinity") and Seacrest Capital Limited
("Seacrest") (Infinity and Seacrest being collectively referred to as "Buyers"),
pursuant to which Buyers subscribed for an aggregate of $5 million principal
amount of Debentures convertible into shares of common stock of Intelect (the
"Debentures"). Pursuant to Section 6 of the Subscription Agreement, Intelect
granted Buyers a right of first refusal on certain private financings offered by
Intelect. Intelect has disclosed to Buyers its desire to consummate, within
seven (7) business days of the date hereof (the "Termination Date"), a private
placement of up to $10 million aggregate principal amount of convertible
debentures on terms substantially as previously described to Buyers (the
"Disclosed Financing"). Intelect has requested that Buyers waive its right of
first refusal with respect to the Disclosed Financing. Buyers are willing to
provide such waiver on the terms hereafter described. Accordingly, Intelect and
Buyers hereby agree as follows (which agreements, to the extent applicable,
shall represent an amendment to the Subscription Agreements and the Debentures):
1. Buyers hereby waive their right of first refusal as described in
Section 6 of the Subscription Agreement with respect to the Disclosed Financing,
provided the Disclosed Financing is consummated prior to the Termination Date.
Intelect Communications Systems Limited
July 31, 1996
Page 2
2. Buyers and Intelect hereby amend the second sentence of
Section 3.1(b) of each Debenture to be and read in its entirety
as follows:
"All or any portion of the Debenture is convertible at any
time, and from time to time, as follows: (i) One-half (1/2) of
the principal balance of all Debentures issued to Holder as
described in Section 7.1 hereafter shall be convertible
beginning on the earlier to occur of August 9, 1996 or the
date the securities and Exchange Commission declares effective
that certain Registration Statement on Form S-3 of the Company
filed with the Securities and Exchange Commission on or about
July 29, 1996 (such earlier to occur date being referred to as
the "Trigger Date"), and (ii) the final one-half (1/2) of the
principal balance of all such Debentures issued to the Holder
shall be convertible beginning thirty (30) days after the
Trigger Date."
3. Intelect and Buyers agree to amend their agreements concerning the
Future Transaction (as define din Section 6 of the Subscription Agreement) as
follows: commencing October 1 and terminating October 20, 1996 (the "Option
Period"), Intelect shall have the option (the "Call") to cause Buyers to
consummate the Future Transaction, and Buyers shall have the option (the "Put")
to require Intelect to accept consummation of the Future Transaction, in each
case on substantially identical terms as set forth in the Subscription
Agreement; provided, Intelect may refuse to accept a Put exercised by Buyers
during the Option Period if (A) on or before October 1, 1996 Intelect has filed
with the Commission a registration statement for the issuance of debt or equity
securities for at least $10,000,000 in aggregate proceeds to Intelect which has
not been withdrawn and which offering is to be underwritten by a nationally
recognized investment banking firm (the "Underwriter") on customary terms and
conditions, and (B) the Underwriter has delivered written notice to Intelect and
Buyers that the exercise of the Put will materially and adversely affect the
ability of Intelect to consummate such underwritten offering.
4. Intelect and Buyers agree to correct a typographical error such that
all references to "Seacrest" Capital Limited in the Subscription Agreement and
the Debentures are hereby changed to "Seacrest" Capital Limited.
5. Except as described herein, the terms and provisions of the
Subscription Agreement and each Debenture are ratified and confirmed and shall
continue in full force and effect.
Intelect Communications Systems Limited
July 31, 1996
Page 3
6. Intelect and each Buyer agrees that at any time and from time to
time, upon written request, it shall execute and deliver such further documents
and do such further acts and things as the requesting party may reasonably
request in order to fully effect the purchase of this letter agreement.
7. From and after the date that Intelect and the Buyers each have
executed this agreement, references in the Subscription Agreement and the
Debentures to the Subscription Agreements and the Debentures shall refer to such
agreement as amended hereby. Intelect further agrees that each certificate for
Debentures issued on or after the date hereof (whether for exchange or in
connection with a partial conversion of the Debentures) shall be issued with the
provisions of Section 3.1(b) reflecting the amendment to such Section set forth
herein.
To evidence your agreement with the foregoing, please countersign this
letter in the space provided below. This letter may be executed in one or more
counterparts and by facsimile signature.
Yours very truly,
SEACREST CAPITAL LIMITED
By:/s/ James E. Martin
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Title: President and Director
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INFINITY INVESTORS, LTD.
By:/s/ J.A. Loughran
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Title: Director
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ACKNOWLEDGED AND AGREED TO:
INTELECT COMMUNICATIONS SYSTEMS LIMITED
By:/s/ Peter G. Leighton
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Title: President
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