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EXHIBIT 10.56
June 30, 1997
Mr. Barrett Wissman
HW Finance, L.L.C.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Dear Barrett:
The enclosed Term Sheet outlines a settlement of all currently disputed issues
between the parties. If you are in agreement with these settlement terms,
please sign in the space below and initial each page of the Term Sheet. We
will then immediately proceed to obtain the approval of the NASDAQ. If
approved by the NASDAQ, we will then prepare the definitive settlement
documents in accordance with the provisions of the Term Sheet.
Sincerely,
/s/ Herman M. Frietsch
Herman M. Frietsch
Chairman and CEO
HMF:jc
INFINITY INVESTORS LIMITED
by: HW Partners L.P., as Advisor
by: HW Finance L.L.C., General Partner
By: /s/ BARRETT H. WISSMAN
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Managing Director
SEACREST CAPITAL LIMITED
by: Sandera Capital Management, L.P.
by: Sandera Capital L.L.C., General Partner
By: /s/ CLARK K. HUNT
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Managing Director
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TERM SHEET FOR SETTLEMENT OF DISPUTES RELATING TO INTELECT COMMUNICATIONS
SYSTEMS LIMITED (THE "COMPANY") 7% CONVERTIBLE DEBENTURES DUE OCTOBER 15, 1998
(THE "EXISTING DEBENTURES")
Holders: Infinity Investors Limited ("Infinity")
Seacrest Capital Limited ("Seacrest")
Conversion of Existing Debentures: All conversions delivered through May 6th, 1997 and conversions
in respect of 20,583 shares of the Company's common stock (the
"Common Stock") (on behalf of Infinity) and 2,287 shares of
Common Stock (on behalf of Seacrest) of the May 7th, 1997
conversions will be honored at conversion prices therein
stated. The balance of the May 7th conversion notice and the
entire amount of the May 8th, 1997 conversion notice will be
converted at $2.00 per share. Such shares of Common Stock will
bear a restrictive legend unless eligible for resale as
described immediately below.
Issuance of Unlegended shares of Common Any shares of Common Stock issued in respect of conversions
Stock: delivered to the Company through May 1st, 1997, and conversions
in respect of 18,965 shares of Common Stock (on behalf of
Infinity) and 20,885 shares of Common Stock (on behalf of
Seacrest) delivered to the Company on May 2nd, 1997, will be
issued without restrictive legends upon receipt of broker's
confirmations per past practice.
Conversion of Balance of Existing Debentures The remaining principal balance of Existing Debentures of
for Common Stock: approximately $2,144,000 will be immediately converted for
Common Stock at a per share conversion price of $5.00.
Resale limitations: The Holders will be restricted from publicly reselling more
than 125,000 shares of Common Stock (whether issued upon
conversion of the Existing Debentures or otherwise held by such
holders at the closing) during any calendar month commencing on
the closing date and ending October 31, 1997; thereafter, such
resale limit shall be increased to 250,000 shares of Common
Stock per month.
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Registration Rights: The Company will file a registration statement on Form S-3
providing for the resale of (1) any shares of Common Stock then
held by either Seacrest, Infinity or Zug Investments and (2)
any shares of Common Stock issued upon conversion of the
Existing Debentures. Furthermore, the Company will use its
best efforts to cause such registration statement to be
declared effective the earlier of September 30, 1997 or two
days following receipt of a "no review" or similar letter from
the SEC.
Other Terms: Holders will agree not to (i) "solicit" proxies or become a
"participant" in any "election contest" as such terms are
defined in Regulation 14A under the 1934 Act, or (ii) assist
any other person to acquire or affect control of the Company.
Holders will waive any quarterly interest payable at June 30,
1997, in connection with the Existing Debentures.
The closing and effectiveness of the restructuring described in
this Term Sheet will be expressly conditioned upon, among other
things, satisfactory evidence that the NASDAQ shall have
approved of, and will raise no objection to, the issuance of
any shares of Common Stock, all as described herein.
All parties will execute full and mutual releases of any and
all claims related to the prior dispute and threats of
litigation.
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