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EXHIBIT 10.49
INTELECT COMMUNICATIONS SYSTEMS LIMITED
SUBSCRIPTION AGREEMENT
FOR
SERIES A CUMULATIVE PREFERRED STOCK
THIS SUBSCRIPTION AGREEMENT (this "Agreement") made and entered into
as of this 30th day of May 1997, by and between INTELECT COMMUNICATIONS
SYSTEMS LIMITED, a company incorporated in Bermuda with limited liability
("ICSL" or the "Company") and THE COASTAL CORPORATION SECOND PENSION TRUST
("Coastal") (the "Parties"):
W I T N E S S:
WHEREAS, the Company has authorized share capital consisting of (a)
80,000,000 shares $.01 per share par value common stock ("Common Stock") and
(b) 15,000,000 shares $.01 per share par value preferred stock;
WHEREAS, the Company has authorized the issuance of 10,000,000 shares
$.01 per share par value, ten percent dividend, cumulative, convertible
preferred stock, Series A, priced at $2.0145 ("Preferred Stock");
WHEREAS, Coastal wishes to purchase the Preferred Stock for the
consideration and on the terms and conditions set forth herein;
WHEREAS, the Parties desire to memorialize their agreement for the
issuance and acquisition of the Preferred Stock of ICSL;
NOW, THEREFORE, for and in consideration of the premises, and the
mutual covenants and agreements herein contained, the Company and Coastal agree
as follows:
ARTICLE 1
GENERAL TERMS
Section 1.01 Definitions. As used in this Agreement, the following
terms shall have the following meanings, unless the context otherwise requires:
"Act" shall mean the Securities Act of 1933, as amended.
"Agreement" shall mean this Agreement, as the same may from time to
time be amended, modified or supplemented.
"Amended and Restated Note" shall mean the Amended and Restated Note
the form of which is attached hereto as Exhibit A.
"Business Day" shall mean a day (other than a Saturday, Sunday or
legal holiday) for commercial lenders pursuant to the laws of the State under
which Coastal is governed.
"Capital Stock" shall mean all common and preferred stock of the
Company, but shall not include preferred stock subject to mandatory redemption
requirements.
"CERCLA" shall have the meaning given in Section 4.01(k).
"Claim" shall have the meaning given in Section 8.02.
"Closing" shall have the meaning given in Section 2.01(b).
"Coastal" shall mean The Coastal Corporation Second Pension Trust.
"Common Stock" means the common shares of ICSL, par value $.01 per
share.
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"Company" shall mean ICSL, including all successors thereto, and
whether merged, consolidated, reincorporated or as its name, domicile or
jurisdiction may change from time to time.
"Company and its Consolidated Subsidiaries" shall mean the Company and
its Subsidiaries which are taken on a consolidated basis for financial
reporting purposes. The Consolidated Subsidiaries of the Company are: Intelect
Systems Corp.; Intelect Network Technologies Company (formerly Intelect,
Inc.); DNA Enterprises, Inc.; Intelect Visual Communications Corp.; and
Intelect Network Systems, Ltd.
"Default" shall mean the occurrence of any of the events specified in
Article 7 hereof, whether or not any requirement for notice or lapse of time or
other condition precedent has been satisfied.
"Designation of Rights and Preferences" and "Designation" shall have
the meaning given in Section 2.01(a).
"Dollar", "Dollars" and "$" shall mean the lawful currency of the
United States of America.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and all current rules and regulations promulgated thereunder.
"Event of Default" shall mean the occurrence of any of the events
specified in Article 7 hereof, provided that any requirement for notice or
lapse of time or any other condition precedent has been satisfied.
"Financial Statements" shall mean the financial statements of the
Company described in Section 5.01 hereof.
"GAAP" shall mean generally accepted accounting principles of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board.
"Indebtedness" shall mean all principal, interest and commitment fees
owing by the Company to Coastal in connection with the Note or this Agreement.
"Indemnified Party" shall have the meaning given in Section 8.02.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan Agreement" shall mean the Loan Agreement dated May 8, 1997, and
all Exhibits hereto, including the Promissory Note, as they may be amended from
time to time.
"Material Adverse Effect" shall mean a material and adverse effect on
the operations or financial condition of the Company or its Subsidiaries.
"Note" shall mean the Promissory Note of the Company described in the
Loan Agreement.
"Parties" shall have the meaning given in the Preamble.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Liens" means (a) Liens now or hereafter securing the Note;
(b) pledges or deposits made to secure payment of workers' compensation,
unemployment insurance, or other forms of governmental insurance or benefits or
to participate in any fund in connection with workers' compensation,
unemployment insurance, pensions, or other social security programs; (c)
good-faith pledges or deposits made to secure performance of bids, tenders,
contracts (other than for the repayment of borrowed money), or leases, or to
secure statutory obligations, surety or appeal bonds, or indemnity,
performance, or other similar bonds in the ordinary course of business; (d)
Liens for taxes and Liens imposed by
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operation of law (including Liens of mechanics, materialmen, warehousemen,
carriers and landlords), if (i) no amounts are due and payable and no Lien has
been filed (or agreed to), or (ii) the validity or amount secured thereof is
being contested in good faith by lawful proceedings diligently conducted,
reserves required by GAAP have been made, and levy and execution thereon have
been (and continue to be) stayed or payment thereof is covered in full (subject
to the customary deductible) by insurance; (e) Liens currently in existence;
(f) Liens covering purchase money debt incurred to finance equipment or
inventory in the ordinary course of business; and (g) Liens securing the
indebtedness to St. ▇▇▇▇▇ Capital Corp.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof, or any other form of
entity.
"Plan" shall mean any multi-employer plan or single employer plan,
as defined in Section 4001 and subject to Title IV of ERISA, which is
maintained, or at any time during the five (5) calendar years preceding the
date of this Agreement was maintained, for employees of the Company or a
Subsidiary.
"Preferred Stock" shall have the meaning given in the Recitals.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Redemption" shall have the meaning given in Section 2.02(a).
"Registration Rights Agreement" means the Registration Rights
Agreement the form of which is attached hereto to Exhibit B, as originally
executed or as it may from time to time be supplemented, modified or amended.
"Securities Act" means the Security Act of 1933, as amended.
"Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the issued and outstanding securities having ordinary voting
power for the election of directors is owned or controlled, directly or
indirectly, by the Company and/or one or more of its Subsidiaries.
"Transaction Documents" means this Agreement, the Designation, the
Registration Rights Agreement and all Exhibits, Certificates and Opinions
pertaining thereto.
ARTICLE 2
TERMS OF SUBSCRIPTIONS
Section 2.01 Issuance and Purchase of Preferred Stock.
(a) On the terms and subject to the conditions of this
Agreement, the Company agrees to issue, and Coastal agrees to purchase,
2,482,005 shares of the Preferred Stock for a purchase price of Two and
1.45/100 Dollars ($2.0145) per share, for an aggregate purchase price of Five
Million Dollars ($5,000,000) in immediately available funds. The Preferred
Stock shall have the designations, preferences, rights and limitations as
specified in the Certificate of Designation of Rights and Preferences dated May
30, 1997.
(b) The sale and purchase of the Preferred Stock shall
take place at 10:00 AM, May 30, 1997, at the offices of Coastal at Nine
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ and thereafter until completed (the "Closing").
At the Closing, the Company shall deliver to Coastal certificates evidencing
the shares of Preferred Stock, registered in the name of Coastal, against
payment as specified herein. Payment shall be in the form of a wire transfer
to an account designated by the Company. The Closing shall be subject to the
conditions set forth in Article 3.
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Section 2.02 Conversion of Loan to Preferred Stock .
(a) At any time, and from time to time, at which there
is Indebtedness outstanding, Company may request, or Coastal may require, that
all or part of the balance of such Indebtedness be redeemed in the form of
issuance of the Preferred Stock of the Company at a redemption price of one
hundred percent (100%) of the principal amount of such Indebtedness to be
redeemed, in each case, plus accrued and unpaid interest to the date fixed for
redemption (the "Redemption"). Such request shall be in writing and the
stock shall be issued within five (5) Business Days after receipt of such
notice. The number of shares of Preferred Stock issued in satisfaction of the
Redemption shall be equal to the product of the amount of the Indebtedness to
be redeemed divided by the price per share of the Preferred Stock stipulated
in Section 2.07(b) of the Loan Agreement, Two and 1.45/100 Dollars ($2.0145)
per share.
(b) At the Closing, on the terms and subject to the
conditions of this Agreement, the Company agrees to issue, and Coastal agrees
to accept 1,737,404 shares of the Preferred Stock at a purchase price of Two
and 1.45/100 Dollars ($2.0145) per share, for an aggregate purchase price of
Three Million Five Hundred Thousand and 36/100 Dollars ($3,500,000.36), said
amount to be credited against, and in partial redemption of, the Indebtedness.
The Redemption of the Preferred Stock shall take place at 10:00 AM, May 30,
1997 at the offices of Coastal at Nine ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇. At the
Redemption, the Company shall deliver to Coastal certificates evidencing the
shares of Preferred Stock, registered in the name of Coastal, against payment
as specified herein. The Redemption shall be subject to the conditions set
forth in Article 3. Company shall execute and deliver an Amended and Restated
Note in the form attached as Exhibit B to reflect cancellation of that portion
of the Indebtedness redeemed.
(c) Each subsequent Redemption until the Indebtedness,
including all amounts due and owing under the Amended and Restated Note, has
been paid in full, shall be subject to certification satisfactory to Coastal
that the conditions of Article 3 hereof have been met and are satisfied as of
the date of such Redemption. As of each such Redemption, Coastal shall
annotate the Amended and Restated Note to reflect cancellation of that portion
of the Indebtedness redeemed. All fees and disbursements (including, without
limitation, all investment banking, legal and other fees and disbursements) of
Coastal in connection with each Redemption shall be paid, to the extent that
the Company has been billed at least one Business Day prior to the Redemption
date, upon the Redemption, and upon request thereafer to the extent not paid.
Section 2.03 Restrictive Legend. Each certificate representing
shares of the Preferred Stock shall be inscribed with the following restrictive
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE. NO SALE, OFFER
TO SELL, TRANSFER OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE SHALL BE MADE UNLESS A
REGISTRATION STATEMENT UNDER THE ACT, WITH RESPECT TO SUCH
SHARES IS THEN IN EFFECT OR UNLESS THE HOLDER OBTAINS AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE
TO THE COMPANY THAT SUCH DISPOSITION IS EXEMPT FROM
REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE BLUE SKY
LAW. THE COMPANY WILL FURNISH TO ANY STOCKHOLDER, UPON
REQUEST AND WITHOUT CHARGE, A FULL STATEMENT OF THE
DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF
THE SHARES OF EACH SERIES OF PREFERRED STOCK AUTHORIZED TO BE
ISSUED BY THE COMPANY."
Section 2.04 Rights and Preferences. The Preferred Stock shall
have the designations, preferences, rights and limitations as specified in the
Certificate of Designation of Rights and Preferences dated May 30, 1997,
including rights to convert the Series A Preferred Shares into Common Stock.
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Section 2.05 Costs. The Company shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the issuance or delivery
of shares of Common Stock of the Company or other securities or property upon
conversion of the Preferred Shares; provided, however, that the Company shall
not be required to pay any taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificate for such
shares or securities in the name other than that of the holder of the Preferred
Shares in respect of which such shares are being issued.
Section 2.06 Registration Rights. The Company agrees to grant to
Coastal certain registration rights under a Registration Rights Agreement, the
form of which is attached as Exhibit B, to be executed at Closing, covering
registration rights in respect to the Common Stock to be acquired upon
conversion of the Preferred Stock acquired under this Agreement upon Closing or
Redemption or as dividends upon the Preferred Stock or otherwise.
Section 2.07 Right of First Refusal. Provided that Coastal has
acquired the Series A Preferred Stock as provided in Section 2.01, for so long
as Coastal holds any security or warrant for a security of the Company, in
addition to any other rights granted in this Agreement or the Designation,
Company hereby grants to Coastal the rights of first refusal to participate in
any offering of an equity interest, including common stock, preferred stock,
warrants or convertible debentures, to be offered by Company or brought to
Company, but excluding (i) underwritten public offerings of Common Stock, (ii)
project financings, (iii) bank financings, (iv) any capital stock of the
Corporation issued pursuant to warrants or other rights issued prior to the
date hereof, (v) the issuance, sale, exercise or conversion or grant of options
to purchase Common Stock pursuant to any of the Corporation's employee stock
option, compensation, bonus or incentive plans or otherwise, and (vi) the
issuance or sale of any equity or debt securities used in acquisitions by the
Corporation of operating assets or stock of entities to be owned and operated
by the Corporation or a Subsidiary. The procedures for notice and exercise of
such right of first refusal are as follows:
(a) In the event that Company offers, seeks to offer, or
receives a proposal to offer, an equity interest, including preferred stock,
warrants or convertible debentures, Company shall first offer the right to
participate in such offering to Coastal. Company shall deliver a true copy of
such proposal, term sheet, information memorandum or other offering description
("Proposal") to Coastal.
(b) Coastal shall have thirty (30) days thereafter to
indicate its intent to participate at the price and otherwise on the terms and
conditions contained in such Proposal by giving written notice to Company to
such effect within said period and stating therein the quantity of securities
to be purchased. All other terms and conditions of Coastal's participation in
such offering shall be on a commercially reasonable basis, and in compliance
with all applicable laws and regulations. Coastal may conduct such due
diligence as is reasonably necessary and appropriate under the circumstances.
(c) If Coastal fails to exercise its right of first
refusal within such thirty (30) day period, then the Company shall have one
hundred twenty (120) days thereafter to sell the securities with respect to
which Coastal's rights were not exercised, at a price and upon general terms no
more favorable to the purchasers thereof than specified in the Company's
notice. In the event that the Company has not sold the securities within such
one hundred twenty (120) day period, the Company shall not thereafter issue or
sell any securities without first offering such securities to Coastal in the
manner provided above.
(d) In any event, if and when the proposed transaction is
consummated, a true and correct copy of the offering documents shall be
delivered to Coastal.
ARTICLE 3
CONDITIONS
The obligation of Coastal to purchase the Preferred Stock is subject
to the satisfaction of the following conditions:
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Section 3.01 Secretary's Certificates. Coastal shall have received
certificates of the Secretary or an Assistant Secretary of the Company setting
forth (i) resolutions of its Board of Directors in form and substance
satisfactory to Coastal with respect to the authorization of this Agreement and
the officers of the Company authorized to sign such instruments, (ii) specimen
signatures of the officers so authorized, and (iii) a certified copy of the
Designation.
Section 3.02 Good Standing. Company shall deliver certificate of good
standing for Company and its Subsidiaries.
Section 3.03 No Default. Coastal shall have received certificates of
an officer of the Company stating no Default shall have occurred and be
continuing which in any respect could have a Material Adverse Effect on the
Company or any Subsidiary and there shall not have occurred and be continuing
any condition, event or act which constitutes an Event of Default under any
instrument evidencing borrowed money to which the Company or any Subsidiary is
bound.
Section 3.04 Regulatory Requirements. The Parties to this Agreement
have determined that all regulatory requirements which are conditions precedent
to the execution of this Agreement has been met, or the time for such
approvals shall have lapsed and no further regulatory action be required.
Section 3.05 Representations and Warranties. The representations and
warranties made by the Company herein and in every other written document
delivered pursuant hereto shall then be true in all material respects; and the
Company shall have performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed or
complied with by them at or before the Closing.
Section 3.06 Payment of Fees and Disbursements. All fees and
disbursements (including, without limitation, all investment banking, legal and
other fees and disbursements) of Coastal in connection with the transactions
contemplated by this Agreement, or any other Transaction Documents shall have
been paid, to the extent that the Company has been billed at least one Business
Day prior to the Closing or Redemption date.
Section 3.07 Opinions of Counsel.
(a) Coastal shall have received from United States
counsel for the Company, an opinion addressed to Coastal to the effect that:
(i) the Company is a corporation duly organized,
validly existing, and in good standing under the laws of Bermuda, and has
the corporate power to conduct its business, to enter into and to perform
its obligations under this Agreement, and to issue the Preferred Stock;
(ii) the authorized capital stock of the Company
consists of (x) 80,000,000 shares of Common Stock, US $.01 par value, and
(y) 15,000,000 shares of Preferred Shares, US $.01 par value, with the
only Preferred Shares issued being those to be issued to Coastal under
this Agreement;
(iii) upon the payment of the consideration described
in this Agreement, the Preferred Stock will be duly authorized, validly
issued, fully paid, and nonassessable;
(iv) all shares of Common Stock issuable upon
conversion of the Preferred Shares have been duly reserved for issuance
and, when issued upon conversion of the Preferred Shares in accordance
with its terms, will be duly authorized, validly issued, fully paid, and
nonassessable;
(v) all shares of Common Stock issuable in payment
of dividends on Preferred Shares as provided for in this Agreement will
be, when so issued, duly authorized, validly issued, fully paid, and
nonassessable.
(vi) The Company has the corporate power to execute,
deliver and carry out the terms and provisions of the Agreement and the
Transaction Documents and has taken all necessary corporate action to
authorize the execution, delivery and performance thereof. The Agreement
and the Note have been duly
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executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with their
respective terms except to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
(vii) To the best of our knowledge without having
undertaken an independent investigation, neither the execution, delivery or
performance by the Company of the Transaction Documents nor the
consummation of the transactions therein contemplated, nor compliance with
the terms and provisions thereof, (i) will contravene any applicable
provision of any law, statute, rule or regulation, or of any order, writ,
injunction or decree of any court or governmental instrumentality known to
such counsel or (ii) will conflict, or be inconsistent with, or result in
any breach of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of
the property or assets of the Company pursuant to the terms of any
indenture, mortgage, deed of trust, agreement or other instrument to which
the Company is a party or by which it or any of its property or assets is
bound or to which it may be subject, or (iii) will violate any provision
of the Memorandum of Association or By-Laws of the Company.
(viii) To the best of our knowledge, except as
disclosed in the Financial Statements, there are no actions, suits or
proceedings pending or threatened against or affecting the Company before
any court or before any governmental or administrative body or agency the
outcome of which is likely to materially and adversely affect the
operations, business, property or assets or the financial condition of the
Company.
(ix) No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority, or
any subdivision thereof, is required to authorize, or is required in
connection with (i) the execution, delivery and performance of the
Agreement or the Transaction Documents, or (ii) the legality, validity,
binding effect or enforceability of the Agreement or the Transaction
Documents.
(x) To the best of our knowledge, each of the
representations and warranties of the Company set forth in any of the
Transaction Documents are true and correct as of the date hereof and all
conditions precedent under the Transaction Documents have been satisfied.
(b) Coastal shall have received from Bermuda counsel for
the Company, an opinion addressed to Coastal in the form attached as Exhibit C.
(c) The opinions required by this Section may, as to
matters of fact, be given in reliance upon certificates of officers of the
Company and public officials and shall contain such other normal and customary
qualifications.
Section 3.08 NASDAQ Requirements. Nothing in the Transaction Documents
may be read or construed (i) to violate the rules of the Securities and
Exchange Commission or any market in which shares of ICSL are traded, and
including the maintenance criteria of the NASDAQ Rule 4460(i)(1)(D)(iii), (as
applied to all shares of ICSL's Common and Preferred Stock deemed to be
aggregated under said Rule), or (ii) to trigger the right of first refusal
under ICSL's 7.5% and 7% Convertible Debentures, and the Parties agree that in
the event either (i) or (ii) would otherwise occur, this Agreement shall not be
enforceable against either Party to the extent of such occurrence, and further,
the Parties agree that in the event either (i) or (ii) would otherwise occur,
they shall amend this Agreement to reflect, and the Designation of Rights and
Preferences of the Preferred Stock shall reflect, such adjustment to price or
quantity as may be necessary to avoid the occurrence of either (i) or (ii).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.01 By The Company. The Company represents and warrants to
Coastal that:
(a) Organization. ICSL is a corporation duly existing
and in good standing under the laws of Bermuda. Each of Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, has all requisite
corporate power and authority to own its Property
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and to carry on its business as now conducted, and is in good standing and
authorized to do business in each jurisdiction in which the Company or such
Subsidiary owns real Property or conducts such business, where the failure to
maintain such good standing or authorization is reasonably expected to have a
Material Adverse Effect.
(b) Authorization; No Conflict. The execution and
delivery of this Agreement, and the performance by the Company of its
obligations under this Agreement are within the Company's corporate powers,
have been duly authorized by all necessary corporate action, have received all
necessary governmental approvals (if any shall be required) and do not and will
not contravene or conflict with any rule, regulation, decree or order or
provision of law or of the charter or the Bye-Laws of the Company or of any
agreement binding upon the Company or any of its properties, except to the
extent any such consent or approval has been obtained or waived, and delivered
to Coastal.
(c) Capitalization. At the date of this Agreement, the
authorized Capital Stock of the Company consists of 80,000,000 shares of Common
Stock, US $.01 of which _________ are issued and outstanding as of
____________, 1997, and 15,000,000 preferred shares, US $.01 of which no shares
are issued and outstanding prior to the issuance of the Preferred Stock to
Coastal under this Agreement. As of May 8, 1997, there were 20,531,598
shares of Common Stock outstanding.
(d) Valid Issuance of Securities. Upon receipt of the
consideration from Coastal as described herein, the Preferred Stock will be
duly authorized, validly issued, fully paid, and nonassessable. All shares of
Common Stock issuable in payment of dividends on outstanding Preferred Shares,
and all shares of Common Stock issuable upon conversion of the Preferred Stock,
will be duly reserved for issuance, and when so issued, will be duly
authorized, fully paid, and nonassessable.
(e) Binding Obligations. This Agreement constitutes the
binding obligation of the Company, enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally or the right to obtain the remedy of specific performance.
(f) Financial Condition. The audited annual consolidated
Financial Statements of the Company and its Consolidated Subsidiaries for its
most recently ended fiscal year (the "1996 Financial Statements"), and the
unaudited consolidated interim Financial Statements of the Company and its
Consolidated Subsidiaries for its most recently ended fiscal quarter (for which
such annual or quarterly Financial Statements are available), which have been
delivered to Coastal, are complete and correct in all material respects, have
been prepared in accordance with GAAP, consistently applied, and present fairly
the consolidated financial condition and results of the operations of the
Company and its Consolidated Subsidiaries as at the date or dates and for the
period or periods stated (subject only to normal year-end audit adjustments
with respect to such unaudited interim statements). No material adverse change
has since occurred in the consolidated financial condition or operations of the
Company and its Consolidated Subsidiaries, except as otherwise disclosed to
Coastal.
(g) Defaults. Except for defaults in payments required
to be made in connection with the acquisition of DNA Enterprises, Inc., as
described in "Note 24 (b)" of the 1996 Financial Statements, neither the
Company nor any Subsidiary is in Default (in any respect which materially and
adversely affects the consolidated business, Property, operations or financial
condition of the Company and its Consolidated Subsidiaries) under any
instrument evidencing borrowed money to which the Company or a Subsidiary is a
party or by which it is bound.
(h) Tax Returns and Payments. The Company has (i) filed
all tax returns which it is required to file, where the failure to file such
returns would have a Material Adverse Effect on the consolidated financial
condition or operations of the Company and its Consolidated Subsidiaries, and
(ii) paid, or has provided adequate reserves for the payment of all material
federal and state income taxes applicable for all prior fiscal years and for
the current fiscal year down to the date hereof.
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(i) Litigation Representation. Except for those matters
disclosed in "Notes 19 and 24 (b)" of the 1996 Financial Statements, there is
no litigation (including without limitation, derivative actions), arbitration
proceedings or governmental proceedings pending or, to the knowledge of the
Company, threatened against it or any Subsidiary which involves the reasonable
probability of a judgment not covered by insurance and which would have a
Material Adverse Effect on the Company and its Consolidated Subsidiaries.
(j) Compliance with ERISA. The Company and each of its
Subsidiaries are in compliance in all material respects with ERISA. Neither
the Company nor any of its Subsidiaries has any material liability under any
type of Plan. No reportable event, as set forth in Section 4043(b) of ERISA,
has occurred and is continuing with respect to any Plan which results in any
material liability to the PBGC.
(k) Environmental Matters. Neither the Company nor any
Subsidiary (i) has received written notice, nor has any officer of the Company
otherwise learned, of any claim, demand, action, event, condition, report or
investigation indicating or concerning any potential or actual liability which
individually or in the aggregate would have a Material Adverse Effect, arising
in connection with: (x) any noncompliance with or violation of the
requirements of any applicable federal, state or local environmental health and
safety statutes and regulations or (y) the release or threatened release of any
toxic or hazardous waste, substance or constituent, or other substance into the
environment, (ii) to the best of Company's knowledge, has any liability in
connection with the release or threatened release of any toxic or hazardous
waste, substance or constituent, or other substance into the environment which
in the aggregate would have a Material Adverse Effect, (iii) has received
notice of any federal or state investigation evaluating whether any remedial
action is needed to respond to a release or threatened release of any toxic or
hazardous waste, substance or constituent or other substance into the
environment for which the Company or any Subsidiary is or may be liable where
the taking or the failure to take such remedial action would have a Material
Adverse Effect, or (iv) has received notice that the Company or any Subsidiary
is or may be liable to any Person under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601 et seq. ("CERCLA"), or any analogous state law, the failure to
comply with which would have a Material Adverse Effect. To the best of the
Company's knowledge, the Company and each Subsidiary is in compliance in all
material respects with the financial responsibility requirements of federal and
state environmental laws to the extent applicable, including, without
limitation, those contained in 40 C.F.R., parts 264 and 265, subpart H, and any
analogous state law, the failure to comply with which would have a Material
Adverse Effect.
(l) Compliance with Applicable Laws. Neither the
Company nor any Subsidiary is in default with respect to any judgment, order,
writ, injunction, decree or decision of any governmental authority, which
default would have a Material Adverse Effect. To the best of the Company's
knowledge, the Company and each Subsidiary is in compliance with all applicable
statutes, rules and regulations, including ERISA, of all governmental
authorities, and (except as disclosed to Coastal) of every exchange on which
the Capital Stock of the Company is listed, a violation of which would have a
Material Adverse Effect.
(m) Patents, Licenses, Etc. Except for those matters
described in "Note 8" to the 1996 Financial Statements, the Company warrants
that it has all right and title to, and has maintained and caused each
Subsidiary to maintain in full force and effect, all material licenses,
copyrights, patents, permits, applications, reports, authorizations, easements
and other rights as are necessary for the conduct of the business of Company
and its Consolidated Subsidiaries, where the termination of such rights would
have a Material Adverse Effect.
(n) Disclosure. Each of Company's representations in the
Transaction Documents are true, complete and accurate in all material respects.
Company has disclosed all material facts of which it has knowledge and
regarding the transaction contemplated by this Agreement. Company has not
failed to disclose to Coastal any material fact necessary in order to make any
statement made, in light of the circumstances under which made, not misleading.
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Section 4.02 By Coastal. Coastal represents and warrants to the Company
that:
(a) Binding Obligation. This Agreement constitutes a
valid and binding obligation of Coastal enforceable against it in accordance
with its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights, and equitable remedies.
(b) No Conflict. Coastal's execution, delivery and
performance of this Agreement does not, violate, conflict with, or constitute a
breach of or default under any loan or credit agreement, indenture, mortgage,
deed of trust, contract, lease, license, or other contract or agreement to
which Coastal is a party or by which its property is bound, or violate any
order, writ, injunction, or decree of any court, administrative agency or
governmental body.
(c) No Approvals. No consent, approval or authorization
of, or declaration to or filing with, any governmental or private party is
required for the valid authorization, execution, delivery and performance by
Coastal of this Agreement.
(d) No Litigation. There are no claims, actions, suits,
proceedings or investigations pending, or, to the knowledge of Coastal
threatened against it, which, if adversely resolved, would materially impair
its ability to perform its obligations under this Agreement or which challenge
the legality of, or seek to enjoin, restrain or prohibit the consummation of
the transactions contemplated by this Agreement.
(e) Investment Purpose. The Securities to be issued to
Coastal under or as contemplated in this Agreement are being acquired, or will
be acquired for investment, for its own account, and not with a view to, or for
resale in connection with, any distribution of Securities within the meaning of
the Securities Act. No Securities may be sold, transferred, or otherwise
disposed of without registration under the Securities Act and any applicable
state securities laws, except under any exemption from those laws.
ARTICLE 5
AFFIRMATIVE COVENANTS
Section 5.01 Financial Statements and Reports. The Company will
promptly furnish to Coastal:
(a) Annual Reports. As soon as available and in any
event within one hundred and twenty (120) days after the close of each fiscal
year of the Company, the audited balance sheet of the Company and its
Consolidated Subsidiaries as at the end of such year, the audited statement of
income of the Company and its Consolidated Subsidiaries for such year, and the
audited statement of reconciliation of capital accounts of the Company and its
Consolidated Subsidiaries for such year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year,
accompanied by the opinion of independent public accountants of national
standing; and
(b) Quarterly Reports. As soon as available and in any
event within sixty (60) days after the end of each of the first three quarterly
periods in each fiscal year of the Company, a copy of the Company's Form 10-Q
as filed with the Securities and Exchange Commission.
(c) Other Information. Such other information regarding
the financial condition and operations of the Company and its Consolidated
Subsidiaries as Coastal may reasonably request. All such balance sheets and
other Financial Statements referred to in Subsections 501(a) and (b) above
shall conform to GAAP except for such changes in accounting principles or
practice with which the independent public accountants concur, and subject to
normal year-end audit adjustments with respect to the unaudited quarterly
statements described in Subsection 5.01(b) hereof.
(d) Actions. Notice of all actions, suits, claims,
proceeding, investigation and inquiries that could reasonably be expected to
have a Material Adverse Effect.
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(e) Defaults. Promptly, and in any event within three
(3) Business Days, after any officer of the Company obtains knowledge of the
existence of any Default under this Agreement or a default under any other
contract to which the Company is a party and which could reasonably be expected
to have a Material Adverse Effect.
Section 5.02 Legal Existence. The Company will, and will cause each
Subsidiary to do, or cause to be done, all things necessary to preserve and
keep in full force and effect its legal existence, rights and franchises;
provided, however, that nothing in this Section 5.02 shall prevent (i) the
withdrawal by the Company or any Subsidiary of its qualification as a foreign
corporation in any jurisdiction; (ii) a consolidation or merger permitted by
other provisions of this Agreement; or (iii) the redomicile of ICSL as to a
jurisdiction within the United States. The Company will use, and will cause
each Subsidiary to use, its best efforts to comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed
by, all governmental bodies, domestic or foreign, in respect of the conduct of
its business and the ownership of its Property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls).
Section 5.03 Use of Proceeds. The proceeds hereunder are to be used to
meet the working capital requirements of Company and its Subsidiaries. No part
of the proceeds may be used to prepay any loan or debt obligation of the
Company, to acquire the stock or assets of any unrelated entity, or for any
other purpose not in the ordinary course of business of Company or its
Subsidiaries, provided that the proceeds may be used to pay the current
obligations and other corporate requirements of Company, provided further, that
the proceeds may not be used to pay the obligations incurred by the Company in
connection with the acquisition of DNA Enterprises, Inc. without Coastal's
written consent, which shall not be unreasonably withheld.
Section 5.04 Insurance. The Company shall maintain, and cause each
Subsidiary to maintain, insurance on its Property against such risks and in
substantially the same amounts as are currently maintained, including, without
limitation, general liability and workers' compensation insurance.
Section 5.05 Maintenance of Property. The Company shall cause all
material Property owned by or leased to the Company or any Subsidiary and used
or useful in the conduct of the Company's business or the business of any
Subsidiary to be maintained and kept in normal condition, repair and working
order and supplied with all necessary equipment and cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company or such Subsidiary may be
necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company or any Subsidiary from
discontinuing the use, operation or maintenance of any such Property, or
disposing of any such Property, if such discontinuance or disposal is, in the
judgment of the Board of Directors or the board of directors, board of trustees
or managing partners of the Subsidiary concerned, or of any officer (or other
agent employed by the Company or any of its Subsidiaries) of the Company or
such Subsidiary having managerial responsibility for any such Property,
desirable in the conduct of the business of the Company or any Subsidiary, and
if such discontinuance or disposal is not disadvantageous in any material
respect to Coastal.
Section 5.06 Inspection of Property; Books and Records; Discussions.
Upon reasonable request by Coastal, the Company shall permit representatives of
Coastal, upon at least two (2) Business Days' prior written notice to a
financial officer of the Company and subject to assertions of attorney-client
privilege and to confidentiality obligations reasonably necessary to protect
proprietary information, to visit the offices of the Company and its
Subsidiaries, to inspect, under guidance of officers of the Company, any of its
Property and examine and make copies or abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired, and
to discuss the business, operations, prospects, licenses, Property and
financial condition of the Company and its Subsidiaries with the officers
thereof.
Section 5.07 Patents, Licenses, Etc. With the exception of the matter
in "Note 8" of the 1996 Financial Statements, the Company shall maintain and
cause each Subsidiary to maintain, in full force and effect, all material
licenses, copyrights, patents, permits, applications, reports, authorizations,
easements and other rights as are necessary for the conduct of its business,
the termination of which would have a Material Adverse Effect. With the
exception of the matter in "Note 8" of the 1996 Financial Statements, Company
shall pay all royalties, annuities and license fees as they become due and
shall not forfeit or allow to lapse any rights under any patent, copyright or
license.
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Section 5.08 Further Assurances. The Company will promptly cure any
defects in the creation and execution of the Transaction Documents. The
Company, at its expense, will promptly execute and deliver to Coastal all such
further documents, agreements and instruments as may reasonably be requested by
Coastal in order to effect any obligation of the Company under this Agreement.
Section 5.09 Reimbursement of Expenses. The Company will, upon request,
promptly reimburse Coastal for all amounts expended, advanced or incurred by
Coastal (including reasonable attorneys' fees and disbursements) to satisfy any
obligations of the Company under this Agreement or to enforce the rights of
Coastal under this Agreement, including all fees and disbursements (including,
without limitation, all investment banking, legal and other fees and
disbursements) of Coastal in connection with the transactions contemplated by
this Agreement, or any other Transaction Documents.
Section 5.10 Notice of Certain Events. The Company shall promptly
notify Coastal if the Company learns of any of the following if such occurs
while the Loan is outstanding: (i) any event which constitutes a continuing
Default or Event of Default, together with a detailed statement by a financial
officer of the Company of the steps being taken to cure the effect of such
Default or Event of Default; or (ii) the receipt of any notice from, or the
taking of any other action by, the holder of any promissory note, debenture or
other evidence of indebtedness for borrowed money of the Company or any
Subsidiary with respect to a claimed default, together with a detailed
statement by a financial officer of the Company specifying the notice given or
other action taken by such holder and the nature of the claimed default and
what action the Company or such Subsidiary is taking or proposes to take with
respect thereto, or (iii) the commencement of any legal, judicial, or
regulatory proceedings affecting the Company or any Subsidiary or any Property
of the Company or such Subsidiary not covered by insurance and which could
reasonably be expected to be adversely determined and which, if so determined,
would have a Material Adverse Effect on the business or the financial condition
of the Company and its Consolidated Subsidiaries; or (iv) any dispute between
the Company or any Subsidiary and any governmental or regulatory body or any
other Person which, could reasonably be expected to be adversely determined,
and which, if so determined, could reasonably be expected to materially
interfere with the normal business operations of the Company and its
Consolidated Subsidiaries; or (v) the occurrence of any material adverse
changes in the financial condition or operations of the Company and its
Consolidated Subsidiaries from those reflected in the latest Financial
Statements.
Section 5.11 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. The Company agrees to file such notices
of exemption or applications for approval or authority as it, in consultation
with legal counsel, deems necessary or advisable with the Federal Trade
Commission and the Antitrust Division of the Department of Justice as required
by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, (15 U.S.C. Section
18a) as amended and the rules and regulations promulgated thereunder by the
Federal Trade Commission. Coastal will assist in preparation of the filing and
any response required by either entity.
ARTICLE 6
NEGATIVE COVENANTS
Without the consent of Coastal, the Company will not:
Section 6.01 Payment of Dividends. Declare or pay any dividend or make
any distribution on its Capital Stock or to the holders of its Capital Stock
(other than (i) dividends or distributions payable in its Capital Stock and
(ii) dividends on its Preferred Stock other than mandatory redemption Preferred
Stock of the Company) or purchase, redeem or otherwise acquire or retire for
value, or permit any Subsidiary to purchase or otherwise acquire for value, any
such Capital Stock if at the time of such action any Loan under this Agreement
is outstanding; provided, however that Company shall be permitted to repurchase
its 7.5% Convertible Debentures dated August 9, 1996 and 7% Convertible
Debentures dated October 15, 1996.
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Section 6.02 Liens and Pledges of Assets and Stock. Company shall not,
nor permit any Subsidiary to, create, incur, assume or suffer to exist,
directly or indirectly, any Lien on all or substantially all of the assets of
the Company or any Subsidiary or the capital stock of any Subsidiary without
the consent of Coastal which consent shall not be unreasonably withheld;
provided, however, that this Section shall not prohibit the Company or any
Subsidiary from creating, assuming or suffering to exist the following Liens:
(i) Liens existing as of the date hereof and renewals and replacements thereof
or the repledging of assets pledged thereunder; (ii) Liens created under
existing mortgages and pledge agreements; (iii) Liens incurred in the ordinary
course of business not in connection with the borrowing of money; or (iv)
Permitted Liens.
Section 6.03 Patents, Licenses, Etc. The Company shall not sell or
transfer any material licenses, copyrights, patents, permits, applications,
reports, authorizations, easements and other rights necessary for the conduct
of its business, the termination of which would have a Material Adverse Effect.
Company shall not forfeit or allow to lapse any rights under any patent,
copyright or license, the loss of which would have a Material Adverse Effect.
Section 6.04 Consolidation or Merger. Enter into or permit any
Subsidiary to enter into any merger or consolidation unless, in the case of the
Company, the surviving entity (i) is in compliance with the covenants contained
in this Agreement immediately after such merger, (ii) assumes all obligations
of the Company under this Agreement, and (iii) is organized under the laws of
the United States or any state thereof, provided that nothing herein shall
prohibit the merger of one or more Subsidiaries into the Company or any other
Subsidiary.
Section 6.05 Sale of Assets. Sell or otherwise transfer all or
substantially all of its fixed assets or permit any Subsidiary to do so;
provided that nothing herein shall prohibit the sale or transfer of fixed
assets of a Subsidiary to the Company or to another Subsidiary.
Section 6.06 Liquidation. The Company shall not adopt a plan of
liquidation which provides for, contemplates or the effectuation of which is
preceded by (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company otherwise than substantially as
an entirety and (ii) the distribution of all or substantially all of the
proceeds of such sale, lease, conveyance or other disposition and of the
remaining assets of the Company to the holders of Capital Stock of the Company
unless the Company shall in connection with the adoption of such plan make
provision for, or agree that prior to making any liquidating distributions it
will make provision, reasonably satisfactory to Coastal, for the satisfaction
of the Company's obligations under the Transaction Documents.
Section 6.07 Restrictive Agreements Prohibited. Enter into or continue
to be a party to any agreement which by its terms restricts the Company's
performance of this Agreement or any related document or the terms of the
Preferred Stock or any agreement which by its terms restricts the payment by
the Company of any dividends or other distributions with respect to Coastal's
shares of Preferred Stock or Common Stock.
Section 6.08 Bye-Laws. Amend the Bye-Laws in any way which would by its
terms restrict the Company's performance of this Agreement or any related
document or the terms of the Preferred Stock or which by its terms restricts
the payment by the Company of any dividends or other distributions with respect
to Coastal's shares of Preferred Stock or Common Stock.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.01 Events. Any of the following events shall be considered an
"Event of Default" as that term is used herein:
(a) Default on Other Debt. Other than the matters
disclosed in "Notes 8" and "24(b)" of the 1996 Financial Statements, the
Company or any Subsidiary fails to make payment when due on any indebtedness
for borrowed money in an aggregate principal amount in excess of One Hundred
Thousand Dollars ($100,000) at the time outstanding (after giving effect to any
applicable grace periods); or any default shall occur with respect to any such
indebtedness, or under any agreement securing or relating to such indebtedness,
the effect of which is to cause or to permit any holder of such indebtedness or
a trustee to cause (whether or not such holder or trustee elects to cause) such
indebtedness, or portion thereof, to become due prior to its stated maturity or
prior to its regularly scheduled dates of payment and such default remains
uncured for a period of thirty (30) days; or
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(b) Non-Payment of Indebtedness. Default is made in the
payment or prepayment when due of any Indebtedness and such Default continues
for a period in excess of five (5) days; or
(c) Representations and Warranties. Any representation
or warranty made by the Company in this Agreement proves to have been incorrect
in any material respect as of the date hereof; or any representation, statement
(including Financial Statements), certificate or data furnished or made by the
Company under this Agreement, proves to have been untrue in any material
respect, as of the date as of which the facts therein set forth were stated and
which in either such case may constitute a Material Adverse Effect; or
(d) Covenants. Default is made in the due observance or
performance of any of the covenants or agreements contained in this Agreement
to be kept or performed by the Company and such Default continues unremedied
for a period of thirty (30) days after the earlier of (i) notice thereof being
given by Coastal to the Company, or (ii) such Default otherwise becoming known
to the Company, where such Default would have a Material Adverse Effect; or
(e) Involuntary Bankruptcy or Receivership Proceedings.
A custodian, receiver, conservator, liquidator or trustee of the Company or any
Subsidiary or of any Property thereof is appointed by the order or decree of
any court or agency or supervisory authority having jurisdiction, and such
decree or order remains unstayed for more than sixty (60) days; or the Company
or any Subsidiary is adjudicated bankrupt or insolvent and such order or decree
remains unstayed for more than sixty (60) days; or any Property of the Company
or any Subsidiary is sequestered by court order; or a petition is filed against
the Company or any Subsidiary under any state or federal bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution,
liquidation or receivership law of any jurisdiction, whether now or hereafter
in effect, and is not stayed or dismissed within sixty (60) days after such
filing; or
(f) Voluntary Petitions. The Company or any Subsidiary
files a petition in voluntary bankruptcy or seeking relief under any provision
of any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction, or consents to the
filing of any such petition under any such law; or
(g) Assignments for Benefit of Creditors, Etc. The
Company or any Subsidiary makes an assignment for the benefit of its creditors,
or admits its inability to pay its debts as they become due, or consents to the
appointment of a receiver, custodian, trustee or liquidator of the Company or
any Subsidiary or of all or any part of its respective Property; or
(h) Discontinuance of Business. The Company, Intelect
Network Technologies Company, DNA Enterprises, Inc., or Intelect Visual
Communications Corp. discontinues its business; or
(i) ERISA Default. A Plan fails to maintain the
qualifications for any Plan required by ERISA, and there shall result from any
such event or events either liability or a material risk of incurring liability
to the PBGC or to a Plan, which would have a Material Adverse Effect; or
(j) Cross Default. Company is in Default under any of
the other Transaction Documents.
ARTICLE 8
SPECIAL INDEMNITY
Section 8.01 Expenses. The Company shall pay (to the maximum extent
permitted by law) all investment fees and expenses and all other reasonable
fees and disbursements (including without limitation, all reasonable fees and
disbursements of counsel) in connection with the transactions contemplated
hereby and by the other Transaction Documents, whether or not such transactions
shall be consummated, and shall pay the reasonable fees and disbursements of
counsel for the holders of the Preferred Stock in connection with any
subsequent amendment, waiver, consent, modification or enforcement hereof or
thereof.
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Section 8.02 Indemnity. The Company agrees to indemnify and hold
harmless (to the maximum extent permitted by law) Coastal and its Affiliates
and their respective directors, members, beneficiaries, trustees beneficial
owners, employees, agents and advisors (each, an "Indemnified Party") from and
against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel and
consultants) (any of the foregoing a "Claim") that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising in each
case arising out of or in connection with or by reason of the actual or
proposed use of the proceeds of the sale of the Series A Preferred Stock
(except to the extent, and only to the extent, that such Claim is for any loss
in value of the Series A Preferred Stock).
ARTICLE 9
MISCELLANEOUS
Section 9.01 Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective Parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement or the Note, addressed to
such party at its address set forth below or at such other address as either of
the Parties hereto may hereafter notify the other in writing.
To Company: INTELECT COMMUNICATIONS SYSTEMS LIMITED
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman and CEO
with a copy to: ▇▇▇▇ & SUDAN, L.L.P.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Sudan, Jr.
To Coastal: THE COASTAL CORPORATION SECOND PENSION TRUST
Nine ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Corporate Secretary
with a copy to: THE COASTAL CORPORATION
Nine ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Director, Financial Administration
Section 9.02 Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the Parties hereto; provided, however, the Company may not assign or
transfer any of its interest hereunder without the prior written consent of
Coastal and provided further that Coastal may not assign its interest hereunder
without the prior written consent of the Company, which consent of either party
shall not be withheld unreasonably.
Section 9.03 Survival of Agreements. All representations and warranties
of the Company herein shall survive the effective date of this Agreement.
Section 9.04 Invalidity. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of the this Agreement.
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Section 9.05 Amendment or Waiver. This Agreement may not be amended,
changed, waived, discharged or terminated without the written consent of the
Company and Coastal.
Section 9.06 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Company or Coastal in exercising any right, power or privilege
hereunder and no course of dealing between the Company and Coastal shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Company or Coastal would otherwise have.
Section 9.07 Headings. The descriptive headings of this Agreement are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 9.08 Counterparts. This Agreement may be executed in any number
of counterparts and by the different Parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Company and Coastal.
Section 9.09 Governing Law. THIS AGREEMENT, AND THE APPLICATION OR
INTERPRETATION THEREOF, SHALL BE GOVERNED EXCLUSIVELY BY ITS TERMS AND BY THE
LOCAL, INTERNAL LAW OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THE CONFLICTS
OF LAWS RULES OF THE STATE OF TEXAS WOULD REQUIRE THE APPLICATION OF THE LAW OF
ANOTHER JURISDICTION IN WHICH CASE THE LAWS OF THE STATE OF TEXAS SHALL
NONETHELESS APPLY. THE PARTIES CONSENT TO JURISDICTION IN THE STATE AND
FEDERAL COURTS LOCATED IN ▇▇▇▇▇▇ COUNTY, TEXAS.
Section 9.10 Entire Agreement. This Agreement, including the Exhibits
attached hereto and the documents delivered pursuant hereto, constitutes the
entire agreement between the Parties with respect to the subject matter of this
Agreement and supersedes all previous communications, representations,
understandings, and agreements, either oral or written, between the Parties
with respect to the subject matter.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
duly executed as of the date first above written.
INTELECT COMMUNICATIONS THE COASTAL CORPORATION SECOND
SYSTEMS LIMITED PENSION TRUST
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
---------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chairman & CEO Senior Vice President
The Coastal Corporation