As filed with the Securities and Exchange Commission on August 13, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-3
--------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
INTELECT COMMUNICATIONS SYSTEMS
LIMITED
(Exact name of registrant as specified in its charter)
---------------------------
BERMUDA N/A
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
REID HOUSE
31 CHURCH STREET
HAMILTON, BERMUDA HM12
(441) 295-8639
(Address, including zip code, and
telephone number, including area code,
of registrant's principal
executive offices)
---------------------------
PETER G. LEIGHTON
PRESIDENT
INTELECT COMMUNICATIONS
SYSTEMS LIMITED
REID HOUSE
31 CHURCH STREET
HAMILTON, BERMUDA HM12
(441) 295-8639
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
Copy to:
Philip P. Rossetti, Esq.
HALE AND DORR
60 State Street
Boston, Massachusetts 02109
(617) 526-6000
---------------------------
Approximate date of commencement of proposed sale to the public: AS
SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
---
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. / X /
----
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
---
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
---
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
---
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of each Proposed Proposed
Class of Amount to be Maximum Maximum Amount of
Securities to Registered Offering Aggregate Registration
be Registered Price Per Offering Fee
Share(1) Price(1)
- ------------------------ --------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C>
Common Shares, $0.01 par
value per share 2,652,170 shares $9.5625 $25,361,376 $8,746
====================================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) and based upon the average of high and low
prices on the Nasdaq National Market on August 9, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), SHALL DETERMINE.
SUBJECT TO COMPLETION DATED AUGUST 13, 1996
2,652,170 Shares
INTELECT COMMUNICATIONS SYSTEMS LIMITED
Common Shares
-----------
The common shares, par value US $0.01 per share (the "Common Shares"),
of Intelect Communications Systems Limited ("Intelect Communications Systems
Limited" or the "Company") covered by this Prospectus are shares issuable upon
conversion of debentures and warrants, which may be offered and sold, from time
to time, for the account of certain shareholders of the Company (the "Selling
Shareholders"). See "Selling Shareholders." The Common Shares covered by this
Prospectus are issuable in connection with certain financings. All of the shares
offered hereunder are to be sold by the Selling Shareholders. The Company will
not receive any of the proceeds from the sale of the shares by the Selling
Shareholders.
The Selling Shareholders may from time to time sell the shares covered
by this Prospectus on the Nasdaq National Market in ordinary brokerage
transactions, in negotiated transactions, or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. See "Plan of
Distribution." The Common Shares are traded on the Nasdaq National Market under
the symbol ICOMF.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
The date of this Prospectus is _________, 1996.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
located at 7 World Trade Center, Suite 1300, New York, New York 10048, and at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials also may be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such materials may also be accessed electronically by means of
the Commission's home page on the Internet at http://www.sec.com. The Common
Shares of the Company are traded on the Nasdaq National Market. Reports and
other information concerning the Company may be inspected at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Common Shares offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, as certain items are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to the Company and the Common Shares offered hereby, reference is made to such
Registration Statement and the exhibits and schedules thereto, which may be
inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of which may be obtained from the
Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1995 and the Company's Transition Report on
Form 10-K for the transition period from November 1, 1995 to
December 31, 1995;
(2) The proxy statement for the Company's Annual Meeting of
Shareholders held on June 26, 1996;
(3) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996; and
(4) The Company's Current Reports on Form 8-K dated November 10,
1995, February 20, 1996 and April 12, 1996 and Amendments to such
Current Reports on Form 8-K/A dated December 4, 1995, April 12,
1996 and June 3, 1996, respectively.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the termination of the offering of the Common Shares
registered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated by reference into this
Prospectus (without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). Requests for such copies should
be directed to the Secretary of the Company, Reid House, 31 Church Street,
Hamilton, Bermuda HM12, telephone (441) 295-8639. Statements in documents
incorporated by reference
-2-
shall be deemed modified by statements herein. Statements so modified shall
constitute part of this Prospectus only as so modified.
ENFORCEABILITY OF CIVIL LIABILITIES UNDER UNITED STATES FEDERAL SECURITIES LAW
The Company conducts its business operations through direct and
indirect subsidiaries. The parent company is a Bermuda company and holds its
assets, including the assets of such subsidiaries, outside the United States. A
majority of the Company's directors and officers are not residents of the United
States. Certain of the Company's assets and most of the assets of its directors
and officers are located outside the United States. As a result, it may be
difficult for investors in the Common Shares to (i) effect service of process
within the United States upon the Company or such persons, or (ii) realize in
the United States upon the judgments of courts of the United States against the
Company or such persons predicated upon the civil liability provisions of the
United States federal securities laws. The Company has been advised by its
Bermuda counsel, Appleby, Spurling & Kempe, that there is doubt (i) whether a
judgment of a United States court predicated solely upon the civil liability
provisions of the United States federal securities laws would be enforceable in
Bermuda against the Company or such persons, and (ii) whether an action could be
brought in Bermuda against the Company or such persons in the first instance on
the basis of a liability predicated solely upon the provisions of the United
States federal securities laws.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
-3-
THE COMPANY
Intelect Communications Systems Limited ("Intelect Communications
Systems Limited" or the "Company") was incorporated under the laws of Bermuda in
April 1980 and operated under the name of Coastal International, Ltd. until
September 1985 and as Challenger International, Ltd. until December 1995. The
Company has several operating subsidiaries (including Intelect, Inc.
("Intelect") based in Richardson, Texas and Intelect Europe Limited ("Intelect
Europe") based in Derbyshire, England). Unless the context otherwise indicates,
the Company refers to Intelect Communications Systems Limited and its
subsidiaries.
During the year ended October 31, 1995 the Company acquired Intelect
and Intelect Europe and disposed of its previous principal operating subsidiary,
Savage Corporation ("Savage"). During the quarter ended March 31, 1996, the
Company acquired DNA Enterprises, Inc. ("DNA") and Mosaic Information
Technologies Inc. ("Mosaic"). The Company's operations are now focused in the
field of providing multimedia voice, data and video products and systems for
communications-critical applications.
The Company's executive offices are located at Reid House, 31 Church
Street, Hamilton, Bermuda HM12 (telephone: (441) 295-8639).
-4-
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common
Shares offered hereby although the Company will receive a total of US
$600,002.02 for these shares if Grayson & Associates, Inc. ("Grayson"), which is
selling an aggregate of 70,063 Common Shares, exercises its warrants to acquire
such shares at an exercise price of US $8.56375 per share.
SELLING SHAREHOLDERS
The Debenture Holders (as defined below) were issued 7.5% Convertible
Debentures due August 8, 1998 (the "Debentures") of the Company on August 8,
1996. Grayson received a warrant to acquire Common Shares on August 8, 1996 in
partial payment of financial advisory services to the Company. The Debenture
Holders and Grayson are collectively referred to as the Selling Shareholders.
The Selling Shareholders were issued securities, for which the Common Shares
covered by this Prospectus are issuable, in a series of private placements as
summarized below:
Of the 2,652,170 Common Shares being registered: (i) an estimated
258,211 Common Shares will be issuable to Navesink Investment Fund, LDC
("Navesink"), an estimated 193,658 Common Shares will be issuable to Banque
Scandinave en Suisse ("Scandinave"), an estimated 129,105 Common Shares will be
issuable to CEFEO Investments Ltd. ("CEFEO"), an estimated 77,463 Common Shares
will be issuable to GAM Arbitrage Investments Inc. ("GAM Arbitrage"), an
estimated 77,463 Common Shares will be issuable to Raphael LP ("Raphael"), an
estimated 335,674 Common Shares will be issuable to Leonardo LP ("Leonardo"), an
estimated 25,821 Common Shares will be issuable to AG Super Fund International
Partners, LP ("Super Fund"), an estimated 451,869 Common Shares will be issuable
to Goodland International Investments Ltd. ("Goodland"), an estimated 193,658
Common Shares will be issuable to Weyburn Overseas Ltd. ("Weyburn"), an
estimated 516,421 Common Shares will be issuable to Halifax Fund, L.P.
("Halifax"), an estimated 193,658 Common Shares will be issuable to Faisal
Finance (Switzerland) S.A. ("Faisal"), an estimated 64,553 Common Shares will be
issuable to Buchanan Fund Limited ("Buchanan Fund"), and an estimated 64,553
Common Shares will be issuable to Buchanan Partners Limited ("Buchanan
Partners") each, subject to certain limitations, upon the conversion of certain
convertible debentures issued to such entities in a private placement (Navesink,
Scandinave, CEFEO, GAM Arbitrage, Raphael, Leonardo, Super Fund, Goodland,
Weyburn, Faisal, Halifax, Buchanan Fund and Buchanan Partners, collectively, the
"Debenture Holders"); and (ii) 70,063 Common Shares will be issuable to Grayson
and upon the exercise of a warrant to acquire Common Shares issued to Grayson
(the "Grayson Warrant"). The number of shares covered by this Prospectus
relating to the Debenture Holders has been estimated to be each Debenture
Holder's pro rata portion of the maximum number of Common Shares issuable upon
conversion of the Debentures without obtaining the approval of the Company's
shareholders, partial redemption of the Debentures or other specified events.
In each case, the issuance of Common Shares to the Selling Shareholders
was undertaken pursuant to Section 4(2) of the Securities Act and, in the case
of the issuances to the Debenture Holders, under Regulation D promulgated
thereunder.
In addition, in connection with the private placement of convertible
debentures described above, the Company and each Debenture Holder entered into a
registration rights agreement (the "Registration Rights Agreement") providing,
among other things, for the registration of the Common Shares issuable upon
conversion of such debentures. The Grayson Warrant provides for registration
rights relating to the Common Shares underlying the Grayson Warrant on
substantially the same terms as the Registration Rights Agreement.
The following table sets forth the number of Common Shares beneficially
owned by each of the Selling Shareholders as of August 9, 1996, the number of
shares to be offered by each of the Selling Shareholders pursuant to this
Prospectus and the number of shares to be beneficially owned by each of the
Selling Shareholders if all of the shares offered hereby are sold as described
herein. Except as provided below, the Selling Shareholders have not held any
positions or offices with, been employed by, or otherwise had a material
relationship with, the Company or any of its predecessors or affiliates since
August 1, 1993.
-5-
<TABLE>
<CAPTION>
Number of Number of
Common Shares Common Shares
Beneficially Number of Beneficially
Name of Owned Common Shares Owned After
Selling Shareholder as of August 9, 1996 Offered Hereby Offering
------------------- -------------------- ------------- --------
<S> <C> <C> <C>
Grayson & Associates, Inc. 70,063 70,063 0
Navesink Investment Fund, LDC (1) 258,211 (1) 258,211 0
Banque Scandinave en Suisse (1) 193,658 (1) 193,658 0
CEFEO Investment Ltd. (1) 129,105 (1) 129,105 0
GAM Arbitrage Investments Inc. (1) 77,463 (1) 77,463 0
Raphael LP (1) 77,463 (1) 77,463 0
Leonardo LP (1) 335,674 (1) 335,674 0
AG Super Fund International
Partners, LP (1) 25,821 (1) 25,821 0
Goodland International
Investments Ltd. (1) 451,869 (1) 451,869 0
Weyburn Overseas Ltd. (1) 193,658 (1) 193,658 0
Halifax Fund, L.P. (1) 516,421 (1) 516,421 0
Faisal Finance
(Switzerland) S.A. (1) 193,658 (1) 193,658 0
Buchanan Partners Limited (1) 64,553 (1) 64,553 0
Buchanan Fund Limited (1) 64,553 (1) 64,553 0
</TABLE>
(1) The Company issued convertible debentures in the aggregate principal amounts
with respect to each Debenture Holder as follows: US $1,000,000 to Navesink; US
$750,000 to Scandinave; US $500,000 to CEFEO; US $300,000 to GAM Arbitrage; US
$300,000 to Raphael; US $1,300,000 to Leonardo; US $100,000 to Super Fund;
$1,750,000 to Goodland; US $750,000 to Weyburn; US $2,000,000 to Halifax; US
$750,000 to Faisal; US $250,000 to Buchanan Fund; and US $250,000 to Buchanan
Partners. Each Debenture provides for conversion into Common Shares on the basis
of a floating conversion ratio tied to a percentage of the market price of the
Company's Common Shares. The principal amount of the Debentures is convertible
into Common Shares in equal one-third amounts sixty, ninety and one hundred
twenty days following August 8, 1996 at the lower of (i) a 15% discount to the
five day average closing bid prior to the notice of conversion date and (ii) the
fixed price conversion of $11.0825. Notwithstanding the foregoing, the Company
is not obligated to issue more than an aggregate of 2,582,107 Common Shares (the
"Maximum Number of Common Shares"). In the event that the conversion price would
result in the issuance of Common Shares in excess of the Maximum Number of
Common Shares upon conversion of the Debentures, the Company, at its election,
shall: (a) obtain shareholder approval of such issuance, (b) obtain a waiver
from Nasdaq of the shareholder approval requirement or (c) redeem a portion of
the Debentures in order to issue not more than the Maximum Number of Common
Shares. In the event that the Company is unsuccessful in obtaining shareholder
approval or a Nasdaq waiver or in effecting a partial redemption, the Company is
subject to a penalty of $500 per day, per million, of the remaining principal
amount of the Debentures as liquidated damages.
-6-
PLAN OF DISTRIBUTION
Common Shares covered hereby may be offered and sold from time to time
by the Selling Shareholders. The Selling Shareholders will act independently of
the Company in making decisions with respect to the timing, manner and size of
each sale. Such sales may be made in the over-the-counter market or otherwise,
at prices related to the then current market price or in negotiated
transactions, including pursuant to an underwritten offering or one or more of
the following methods: (a) purchases by the broker-dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (b)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (c) block trades in which the broker-dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction. The Company has been advised
by the Selling Shareholders that they have not made any arrangements relating to
the distribution of the shares covered by this Prospectus. In effecting sales,
broker-dealers engaged by the Selling Shareholders may arrange for other
broker-dealers to participate. Broker-dealers will receive commissions or
discounts from the Selling Shareholders in amounts to be negotiated immediately
prior to the sale. The Registration Rights Agreement provides that the Company
will indemnify the Selling Shareholders against certain liabilities, including
liabilities under the Securities Act.
In offering the Common Shares covered hereby, the Selling Shareholders
and any broker-dealers and any other participating broker-dealers who execute
sales for the Selling Shareholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any profits
realized by the Selling Shareholders and the compensation of such broker-dealer
may be deemed to be underwriting discounts and commissions. In addition, any
shares covered by this Prospectus which qualify for sale pursuant to Rule 144
may be sold under Rule 144 rather than pursuant to this Prospectus. None of the
shares covered by this Prospectus presently qualifies for sale pursuant to Rule
144.
The Company has advised the Selling Shareholders that during such time
as they may be engaged in a distribution of Common Shares included herein they
are required to comply with Rules 10b-6 and 10b-7 under the Exchange Act (as
those Rules are described in more detail below) and, in connection therewith,
that they may not engage in any stabilization activity in connection with
Intelect securities, are required to furnish to each broker-dealer through which
Common Shares included herein may be offered copies of this Prospectus, and may
not bid for or purchase any securities of the Company or attempt to induce any
person to purchase any Intelect securities except as permitted under the
Exchange Act. The Selling Shareholders have agreed to inform the Company when
the distribution of the shares is completed.
Rule 10b-6 under the Exchange Act prohibits, with certain exceptions,
participants in a distribution from bidding for or purchasing, for an account in
which the participant has a beneficial interest, any of the securities that are
the subject of the distribution. Rule 10b-7 governs bids and purchases made in
order to stabilize the price of a security in connection with a distribution of
the security.
This offering will terminate on the earlier of (a) the date on which
the shares are eligible for resale pursuant to Rule 144 under the Securities Act
or (b) the date on which all shares offered hereby have been sold by the Selling
Shareholders.
DESCRIPTION OF CAPITAL STOCK
The authorized share capital of the Company is US $950,000, divided
into 80,000,000 Common Shares of US $0.01 par value each (the "Common Shares")
and 15,000,000 Serial Preferred Shares of US $0.01 par value each (the
"Preferred Shares"). As of August 9, 1996, there were 12,910,541 Common Shares
and no Preferred Shares issued and outstanding.
-7-
COMMON SHARES
The holders of Common Shares shall be entitled to rank pari passu in
all respects with each other holder of Common Shares. Any shareholder who is a
holder of Common Shares shall be entitled to one vote for each Common Share held
by such holder. Subject to the payment of preferential amounts to which the
holders of any Preferred Shares which may be issued from time to time may be
entitled, holders of the Common Shares shall be entitled, pro rata to their
holding of Common Shares, to participate in any assets or surplus of the Company
distributable in any liquidation, dissolution or winding-up of the Company. Each
holder of Common Shares is entitled to dividends declared from time to time by
the Board of Directors out of assets legally available therefor.
PREFERRED SHARES
The Preferred Shares may be issued from time to time in one or more
series and in such amount as may be established or designated from time to time
by the Board of Directors in accordance of the Bye-Laws of the Company. The
Board of Directors has the authority to establish and designate any unissued
Preferred Shares as a series of such of shares.
APPROVAL OF CERTAIN TRANSACTIONS
The holders of a simple majority of the votes cast can approve such
fundamental transactions as the liquidation of the Company, the sale of
substantially all of its assets, and a merger, consolidation or other similar
events involving the Company. The Bye-Laws, notwithstanding the foregoing,
provide that a proposed amalgamation, merger, consolidation or share exchange of
the Company, if it has not been recommended by the Board of Directors, will
require the affirmative vote of ninety percent (90%) of the outstanding shares
of each class entitled to vote thereon. This provision may have the effect of
delaying or preventing a change in control of the Company.
VARIATION OF RIGHTS
If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of issue of the shares of that class) may, whether or not the Company is being
wound up, be varied with the consent in writing of the holders of three-fourths
of the issued and outstanding shares of that class or with the sanction of a
resolution passed by a majority of the votes cast at a separate general meeting
of the holders of the shares of the class in accordance with the relevant
provisions of the Companies Act 1981 of Bermuda. The rights conferred upon the
holders of the shares of any class issued with preferred or other rights shall
not, unless otherwise expressly provided by the terms of issue of the shares of
that class, be deemed to be varied by the creation or issue of further shares
ranking pari passu therewith.
LIMITATIONS ON OWNERSHIP OF SHARES BY RESIDENTS OF BERMUDA
Under the Exchange Control Act of 1972 of Bermuda, the issue and
transfer of shares of Bermuda companies such as the Company is subject to the
prior general approval of the Bermuda Monetary Authority (the "Authority"). The
Authority has approved the issue and subsequent unrestricted transfer of the
Shares offered by this Prospectus to and between persons and corporations
considered by the Authority to be nonresidents of Bermuda for foreign exchange
purposes. The issue or transfer of Shares of the Company to persons or
corporations considered by the Authority to be residents of Bermuda for foreign
exchange purposes will require the specific approval of the Authority.
LEGAL MATTERS
The validity of the Common Shares offered by the Selling Shareholders
hereby will be passed upon by Appleby, Spurling & Kempe, Hamilton, Bermuda.
EXPERTS
The consolidated financial statements and financial statement schedules
of Intelect Communications Systems Limited as of December 31, 1995 and October
31, 1995 and 1994 and for the two month period ended December 31, 1995 and each
of the years in the three-year period ended October 31, 1995, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG Peat Marwick, Hamilton, Bermuda, independent chartered
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of Intelect, Inc. as of April 24,
1995 and December 31, 1994 and 1993 and for the years ended December 31, 1994
and 1993 and the period from January 1, 1995 to April 24, 1995, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG Peat
-8-
Marwick LLP, Dallas, Texas, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The financial statements of DNA Enterprises, Inc. as of December 31,
1995 and 1994 and for each of the years in the three-year period ended December
31, 1995, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, Dallas, Texas,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The financial statements of Mosaic Information Technologies Inc. (a
development stage company) as of December 31, 1995, 1994 and 1993 and for each
of the years in the three-year period ended December 31, 1995 and for the period
from January 24, 1992 (date of inception) through December 31, 1995, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG Peat Marwick LLP, New York, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering Mosaic Information
Technologies Inc. (a development stage company) financial statements as of
December 31, 1995, 1994 and 1993 and for each of the years in the three-year
period ended December 31, 1995 and for the period from January 24, 1992 (date of
inception) through to December 31, 1995, contains an explanatory paragraph which
states that the Company's recurring losses from operations since inception,
working capital deficiency and net capital deficiency raise substantial doubt
about the entity's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
that uncertainty.
-9-
PROSPECTUS
TABLE OF CONTENTS
Page
----
Available Information................................................... 2
Incorporation of Certain Documents by Reference ........................ 2
Enforceability of Civil Liabilities Under
United States Federal Securities Laws................................. 3
The Company............................................................. 4
Use of Proceeds......................................................... 5
Selling Shareholders.................................................... 5
Plan of Distribution.................................................... 7
Description of Capital Stock............................................ 7
Legal Matters........................................................... 8
Experts................................................................. 8
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Nature of Expense
- -----------------
SEC Registration Fee............................................. $8,746
Legal (including Blue Sky) and
Accounting Fees and Expenses................................... 15,000*
Miscellaneous.................................................... 5,000*
TOTAL $28,746*
- --------------------
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Bye-Law 7.2 of the Registrant's Bye-Laws provides for indemnification
by the Registrant of directors and officers, or a person who acts or acted at
the Registrant's request as a director or officer of a body corporate of which
the Registrant is or was a Member or creditor, and his heirs and legal
representatives, against all costs, judgements, fines, taxes, penalties, charges
and expenses (including attorney's fees), including an amount paid to settle an
action or satisfy a judgement, reasonably incurred by him in respect of any
civil, criminal or administrative action or proceeding to which he is made a
party by reason of being or having been a director or officer of the Registrant
or such body corporate; provided that the obligation of the Registrant to so
indemnify shall not extend to any liability in respect of any wilful negligence,
wilful default, fraud or dishonesty which may attach to any such person. The
Registrant shall also indemnify any such person in such other circumstances to
the fullest extent as the Companies Act of 1981 of Bermuda as amended from time
(the Act) or applicable law permits or requires. Further, nothing in said
Bye-Law shall limit the right of any person entitled to indemnity to claim
indemnity apart from the provisions of said Bye-Law.
Subject to the Act, the Registrant may purchase and maintain insurance
for the benefit of directors and officers covered by the indemnity provision of
the Bye-Laws.
The Companies Act of 1981 of Bermuda provides that (i) subject to
sub-paragraph (ii) below, a Company may in its bye-laws or in any contract or
arrangement between the Company and any officer, or any person employed by the
Company as auditor, exempt such officer or person from, or indemnify him in
respect of, any loss arising or liability attaching to him by virtue of any rule
of law in respect of any negligence, default, breach of duty or breach of trust
of which the officer or person may be guilty in relation to the Company or any
subsidiary thereof, and (ii) any provision, whether contained in the bye-laws of
a company or in a contract or arrangement between a company and any director or
officer, which purports to indemnify against liability in respect of wilful
negligence, wilful default, fraud or dishonesty of which he may be guilty, shall
be void. Accordingly, if a director or officer should be found guilty of wilful
negligence, wilful default, fraud or dishonesty in relation to the affairs of
the Registrant, he would not be indemnified by the Registrant in such
circumstances.
The Company has a directors and officers liability policy that insures
the Company's directors and officers against certain liabilities.
ITEM 16. EXHIBITS.
See Exhibit Index included immediately preceding the Exhibits to this
Registration Statement, which is incorporated herein by reference.
II-1
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that paragraphs (1)(i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") that are incorporated by reference in this Registration
Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable,
each filing of any employer benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the indemnification provisions described herein, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceedings) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hamilton, Bermuda on the 13th day of August, 1996.
INTELECT COMMUNICATIONS SYSTEMS LIMITED
By: /s/ Peter G. Leighton
------------------------------------
PETER G. LEIGHTON
President
SIGNATURES AND POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Peter G. Leighton, Rhianon M. Pedro and Philip P. Rossetti and each of them, his
or her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution in each of them, for him or her and in his or
her name, place and stead, and in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
on Form S-3 of Intelect Communications Systems Limited, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them or their or his substitutes or substitute, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 13th day of August, 1996.
SIGNATURE TITLE
--------- -----
/s/ Herman M. Frietsch Director and Executive Chairman
- -----------------------------
Herman M. Frietsch
/s/ Peter G. Leighton Director and President
- ----------------------------- (Principal Executive Officer)
Peter G. Leighton
/s/ Jeremy T.G. Posner Director
- -----------------------------
Jeremy T.G. Posner
- ----------------------------- Director
Anton von und zu Liechtenstein
II-3
_____________________________ Director
Wendell M. Hollis
/s/ Rhianon M. Pedro Chief Financial Officer,
- ----------------------------- Treasurer and Secretary
Rhianon M. Pedro (Principal Accounting and
Financial Officer)
II-4
Exhibit Index
EXHIBIT DESCRIPTION OF EXHIBIT
- ------- ----------------------
4.1 -- Memorandum of Association
of the Company, as amended*
4.2 -- Certificate of Incorporation of the Company,
as amended*
4.3 -- Bye-Laws of the Company*
5.1 -- Opinion of Appleby, Spurling & Kempe
23.1 -- Consent of Appleby, Spurling & Kempe (included
in Exhibit 5.1)
23.2 -- Consent of KPMG Peat Marwick (Hamilton,
Bermuda)
23.3 -- Consent of KPMG Peat Marwick LLP (New York,
New York)
23.4 -- Consent of KPMG Peat Marwick LLP (Dallas, Texas)
24.1 -- Power of Attorney (appears on Pages II-3 and II-4)
- ----------------------
* Incorporated by reference from the Company's Registration Statement on
Form S-3 (File No. 333-09049).
EXHIBIT 5.1
[LETTERHEAD OF APPLEBY,
SPURLING & KEMPE]
APPLEBY, SPURLING & KEMPE
BARRISTERS & ATTORNEYS
CEDAR HOUSE, 41 CEDAR AVENUE, HAMILTON HM 12, BERMUDA
MAIL: PO BOX HM 1179, HAMILTON HM EX, BERMUDA
TELEPHONE: + 441 295 2244
FAX: + 441 292 8666/441 295 5328
YOUR REF:
OUR REF: ASM/RT
13th August, 1996
Intelect Communications Systems Limited
Reid House
Church Street
Hamilton HM 12
Bermuda
Dear Sirs,
RE: INTELECT COMMUNICATIONS SYSTEMS LIMITED
---------------------------------------
We have acted as Bermuda legal advisers to Intelect Communications
Systems Limited, a Bermuda company (the "Company"). We have been requested to
render this opinion as to Bermuda law in connection with its registration for
resale of 2,652,170 shares of Common Stock (the "Resale Shares") as described in
the Company's Prospectus (the "Prospectus") contained in the Form S-3
Registration Statement (the "Registration Statement"), filed with the United
States Securities and Exchange Commission under the Securities Act of 1933, as
amended.
For the purposes of this opinion, we have been supplied with and
reviewed a copy of the Registration Statement, and have relied upon the
Memorandum of Association and Bye-Laws of the Company and such other documents,
certificates and records and have made such investigations as we deem necessary
or appropriate in order to give the opinion expressed herein.
We have assumed:-
(i) the genuineness of all signatures on the documents which we
have examined; and
(ii) the conformity to original documents of all documents produced
to us as copies and the authenticity of all original documents
which, or copies of which, have been submitted to us.
2
Based upon and subject to the foregoing and subject to the reservations
mentioned below and to any matters not disclosed to us, we are of the opinion
that:-
(i) the Company is duly incorporated and validly existing under
Bermuda law;
(ii) the Resale Shares have been duly authorized and validly issued
by the Company and subject to no further calls; and
(iii) the statements set forth in the Prospectus under the headings
"Enforceability of Civil Liabilities under United States
Federal Securities Law" and "Description of Capital Stock" to
the extent that they constitute matters of Bermuda law, or
legal conclusions with respect thereto, have been reviewed by
us and are accurate in all material respects and fairly
present the information disclosed therein in all material
respects.
Our reservations are as follows:-
(A) We express no opinion as to any law other than Bermuda law and
none of the opinions expressed herein relates to compliance
with or matters governed by the laws of any jurisdiction other
than Bermuda. Where an obligation is to be performed in a
jurisdiction other than Bermuda, a Bermuda court may decline
to enforce it to the extent that such performance would be
illegal or contrary to public policy under the laws of such
other jurisdiction.
(B) We express no opinion as to the availability of equitable
remedies, such as specific performance or injunctive relief,
or as to any matters which are within the discretion of the
Bermuda courts, such as the award of costs, or questions
related to jurisdiction. Further, we express no opinion as to
the validity or binding effect in Bermuda of any waiver of or
obligation to waive any provision of law (whether substantive
or procedural) or any right or remedy arising through
circumstances not known at the time of the filing of the
Registration Statement.
(C) Section 9 of the Interest and Credit Charges (Regulation) Act
1975 provides that the Bermuda courts have discretion as to
the amount of interest if any payable on the amount of a
judgment after date of judgment. If the court does not
exercise that discretion, then interest will accrue at the
statutory rate which is currently seven per cent per annum.
3
(D) Where a party is vested with a discretion or may determine a
matter in its opinion, such discretion may have to be
exercised reasonably or such an opinion may have to be based
on reasonable grounds.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under the caption
"Enforceability of Civil Liabilities under United States Federal Securities Law"
and "Legal Matters" in the Prospectus which is a part of the Registration
Statement.
This opinion is issued on the basis that it will be construed in
accordance with the provisions of Bermuda law. It is issued solely for the
benefit of the addressee in relation to the transaction described above and is
not to be made available to or relied upon by any other person, firm or entity.
Yours faithfully,
Appleby, Spurling & Kempe
/s/ Appleby, Spurling & Kempe
EXHIBIT 23.2
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
To the Board of Directors
Intelect Communications Systems Limited
We consent to the incorporation by reference in the registration statement
relating to the offering for sale of 2,652,170 common shares on Form S-3 of
Intelect Communications Systems Limited of our report dated March 15, 1996
relating to the consolidated balance sheets of Intelect Communications Systems
Limited and subsidiaries as of December 31, 1995 and October 31, 1995 and 1994
and the related consolidated statements of operations, changes in stockholders'
equity and cash flows for the two month period ended December 31, 1995 and each
of the years in the three-year period ended October 31, 1995, and all related
schedules, which report appears in the December 31, 1995 Form 10-K Transition
Report of Intelect Communications Systems Limited, and our report dated January
19, 1996 relating to the consolidated balance sheets of Intelect Communications
Systems Limited and subsidiaries as of October 31, 1995 and 1994 and the related
consolidated statements of operations, changes in shareholders' equity and cash
flows for each of the years in the three-year period ended October 31, 1995, and
all related schedules, which report appears in the October 31, 1995 Form 10-K of
Intelect Communications Systems Limited.
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick
Hamilton, Bermuda Chartered Accountants
August 13, 1996
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
To The Board of Directors
Intelect Communications Systems Limited:
We consent to the use of our report dated May 22, 1996 incorporated herein by
reference relating to the balance sheets of MOSAIC Information Technologies,
Inc. (a development stage corporation) as December 31, 1993, 1994 and 1995, and
the related statements of operations, stockholders' equity (deficiency) and cash
flows for the years ended December 31, 1993, 1994 and 1995 and for the period
from January 24, 1992 (date of inception) through December 31, 1995, which
report appears in the June 3, 1996 Form 8-K/A of Intelect Communications
Limited. Our report dated May 22, 1996, contains an explanatory paragraph that
states that the Company has suffered recurring losses from operations since
inception and has a working capital deficiency and net capital deficiency, which
raise substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of that uncertainty.
We consent to the use of our report incorporated herein by reference to our firm
under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
New York, New York
August 12, 1996
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Intelect Communications Systems Limited:
We Consent to (a) the use of our report dated February 16, 1996 relating to the
balance sheets of DNA Enterprises, Inc. as of December 31, 1995 and 1994 and the
related statements of income, stockholders' equity and cash flows for each of
the years in the three-year period ended December 31, 1995, incorporated herein
by reference and included in the Form 8-K/A dated April 12, 1996, (b) the use of
our report dated November 22, 1995 relating to the balance sheets of Intelect,
Inc. as of April 24, 1995 and December 31, 1994 and 1993 and the related
statements of operations and accumulated deficit and cash flows for the period
from January 1, 1995 to April 24, 1995 and for each of the years in the two-year
period ended December 31, 1994, incorporated herein by reference and included in
the Form 8-K/A dated December 4, 1995, and (c) the reference to our firm under
the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Dallas, Texas
August 8, 1996
