EXHIBIT 10.6
ST. ▇▇▇▇▇ CAPITAL CORP.
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▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
September 14, 1998
Intelect Communications, Inc.
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AGREEMENT FOR PURCHASE AND SALE DATED FEBRUARY 12, 1998
Gentlemen:
Reference is hereby made to the Agreement for Purchase and Sale dated as
of February12, 1998 (the "Agreement") between you as Seller and St. ▇▇▇▇▇
Capital Partners, L.P. as Purchaser ("SJCP"), as partially assigned to SJMB,
L.P. ("SJMB") and Falcon Seaboard Investment Co., LP ("Falcon", and together
with SJCP and SJMB, the "Purchasers"). Capitalized terms used herein but not
otherwise defined shall have the meaning given them in the Agreement. You have
informed us that Seller has agreed to enter into a loan agreement as borrower
with The Coastal Corporation Second Pension Trust as lender ("Coastal"),
pursuant to which Seller has agreed to borrow up to $5, 000,000 from Coastal.
You have also informed us that such loan shall be secured by the accounts
receivable of the Seller and by a second priority interest in the capital stock
of certain subsidiaries of the Seller. We write to confirm the agreement of the
Purchasers that, notwithstanding the provisions of the Agreement or the Borrower
Pledge, the Purchasers consent to the transactions with Coastal set forth above.
The foregoing consent is subject to the following conditions:
1. Seller shall provide, as of the date hereof, evidence to the
Purchasers that Coastal has executed and delivered an intercreditor
agreement in form and substance satisfactory to the Purchasers;
2. Seller shall commence providing, as soon as available, and in any
event within thirty (30) days after the end of each month,
consolidated financial statements of the Seller and its Subsidiaries
for such month, together with all notes thereto, prepared in a
manner consistent with Seller's internal reporting practices, and
certified by the chief financial officer of the Seller. These
financial statements shall contain a consolidated
balance sheet as of the end of such month and consolidated
statements of earnings, and of cash flows.
3. Seller shall commence providing, as soon as available, and in any
event within forty- five (45) days after the end of each of the
first three quarters and within sixty (60) days after year-end,
consolidated financial statements of the Seller and its Subsidiaries
for such quarter, together with all notes thereto, prepared in
accordance with GAAP, and certified by the chief financial officer
of the Seller. These financial statements shall contain a
consolidated balance sheet as of the end of such quarter and
consolidated statements of earnings, of cash flows, and of changes
in owners' equity for such quarter, each setting forth in
comparative form the corresponding figures of the preceding quarter.
4. Seller acknowledges and confirms that:
(a) the ceiling of the fixed conversion price for the Seller's
Series D Preferred Stock was reset to the volume weighted average
trading price for the period between August 17, 1998 and August 21,
1998, which reset price is equal to $2.998 per share, subject to the
agreement of the holders of such securities to delay the effective
date of such reset to November 10, 1998;
(b) the reset described in 3(a) above triggered provisions of
Article III of the Warrants, and the resulting adjustments to the
Exercise Price of the Warrants and the number of shares of Common
Stock purchasable upon the exercise of the Warrants are accurately
set forth on Exhibit A attached hereto, subject to the terms of the
Letter Agreement with Citadel Limited Partnership dated August 23,
1998, the intention of Seller and Purchaser being to clarify the
operation of the provisions of Article III of the Warrants as a
condition to the consent granted hereunder; and
(c) Seller will keep Purchaser informed as to the terms and progress
of any discussions with Citadel Limited Partnership regarding the
restructuring of the preferred stock and will promptly disclose to
Purchaser the full and complete terms of any such restructuring.
5. Seller agrees that, if Seller elects to extend the maturity date of
the Notes, the exercise price per share for the Warrants referenced
in Section 1.3(c) of the Agreement shall be the LESSER of (1) $1.50
over the volume weighted average closing price of the Common Stock
for the ten (10) day period prior to the date of the Seller's
election to extend the maturity date of the Note and (2) $3.50.
Seller agrees that it shall not elect to extend the maturity of the
Notes unless it has obtained or simultaneously obtains an extension
of the maturity of the Coastal debt to a date on or after the
maturity date of the Notes. In the event any extension or amendment
of the Coastal Debt causes a change in the terms of the Coastal debt
which effects a change in the nature of Coastal's collateralization,
increases the Coastal debt or changes the priorities of Coastal's
security interests, Seller must first obtain the consent of
Purchaser to such revised terms.
6. Seller shall pay to the Purchasers any outstanding fees or other
amounts due and owing as of the date hereof.
7. Seller hereby acknowledges and agrees that Section 3.1(d) of each of
the Notes shall be amended to read in its entirety as follows:
(d) the Company or any Subsidiary defaults in the payment when
due (whether by lapse of time, by declaration, by call for
redemption or otherwise) of the principal of or interest on (i) any
Indebtedness of the Company or such Subsidiary (other than the
Indebtedness evidenced by this Note or referenced in clause (ii) of
this Section 3.1(d)) having an aggregate principal amount in excess
of $200,000 or on any Indebtedness of the Company to any of its
stockholders and such default remains uncured for a period of 45
days; or (ii) any Indebtedness of the Company or such subsidiary
owed to The Coastal Corporation Pension Trust, including any of its
affiliates and permitted assignees; or
Seller further acknowledges and agrees that this letter agreement
shall serve as an endorsement to each of the Notes.
This letter shall not constitute a waiver of any other provision of the
Agreement nor be construed as an agreement by the Purchasers to agree to waive
any provisions of the Agreement in the future. To the extent this letter
agreement constitutes an amendment of the Agreement, the parties by their
signature hereon consent and agree to such amendment of the Agreement.
Very truly yours,
ST. ▇▇▇▇▇ CAPITAL PARTNERS, L.P.
By: St. ▇▇▇▇▇ Capital Corp.
By: _____________________________
Name:
Title:
SJMB, L.P.
By: SJMB, L.L.C.
By: _____________________________
Name:
Title:
FALCON SEABOARD INVESTMENT CO., LP
By: _____________________________
Name:
Title:
AGREED AND ACKNOWLEDGED THIS
____ DAY OF SEPTEMBER, 1998.
INTELECT COMMUNICATIONS, INC.
By: _____________________________
Name:
Title:
