SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
INTELECT COMMUNICATIONS, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
458144102
(CUSIP number)
JOHN L. THOMPSON
SJMB, L.P.
c/o SJMB, L.L.C.
1980 POST OAK BLVD., SUITE 2030
HOUSTON, TEXAS 77056
(713) 871-0799
(Name, address and telephone number of person
authorized to receive notices and communications)
February 12, 1998
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13g to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with this statement. [ ]
The information required in the remainder of this cover page shall not be deemed
to be filed for the purpose of Section 18 of the Securities Exchange Act of 1934
("Act") or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act.
<PAGE>
CUSIP No. 458144102
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1 NAME OF REPORTING PERSONS SJMB, L.P.
S.S. NUMBER OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS 76-0559975
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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NUMBER OF 7 SOLE VOTING POWER 1,872,777
SHARES --------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 0
OWNED BY --------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 1,872,777
REPORTING --------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH 1,872,777
REPORTING PERSON
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON PN
- --------------------------------------------------------------------------------
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<PAGE>
CUSIP No. 458144102
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS SJMB, L.L.C.
S.S. NUMBER OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS 76-0559974
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER 1,872,777
SHARES --------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 0
OWNED BY --------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 1,872,777
REPORTING --------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH 1,872,777
REPORTING PERSON
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON CO
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-3-
<PAGE>
ITEM 1. Security and Issuer.
SJMB, L.P., a Delaware investment limited partnership (the "Partnership"), has
acquired beneficial ownership of 1,872,777 shares (the "Shares") of the common
stock, par value $.01 per share (the "Common Stock"), of Intelect
Communications, Inc., a Delaware corporation ("ICOM"). The address of ICOM's
offices is 1100 Executive Drive, Richardson, Texas 75081.
ITEM 2. Identity and Background.
SJMB, L.L.C., a Delaware corporation ("SJMB"), is the general partner of the
Partnership. The principal business of SJMB is investment management. The
directors of SJMB are Charles E. Underbrink, John L. Thompson, Alan D.
Feinsilver, Titus H. Harris, Jr., and Edward R. Naumes. The executive officers
of SJMB are Messrs. Underbrink, Thompson, and Feinsilver. The business address
of SJMB is 1980 Post Oak Blvd., Suite 2030, Houston, Texas 77056. The principal
occupation of each of the executive officers and directors is investment
management and each is a citizen of the United States. Mr. Harris is a partner
of Harris, Webb, and Garrison, Inc., a regional investment banking firm with its
principal business address at 5599 San Felipe, Suite 301, Houston, Texas 77056.
Mr. Naumes is the President of Legacy Trust Company, a private trust company
with its principal address at 600 Jefferson, Suite 350, Houston, Texas 77002.
None of SJMB or its executive officers and directors has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors)
during the last five years and has not been subject to a judgement, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or State securities laws or finding any violation
with respect to such laws.
ITEM 3. Source and Amount of Funds or other Consideration.
All of the funds used for the purchase of the Shares came from current working
capital of the Partnership, funded by its partners or from borrowed funds.
ITEM 4. Purpose of Transaction.
The Partnership has acquired its beneficial ownership in the Shares for
investment purposes only. The Partnership intends to continually review its
investment in ICOM. Depending upon future evaluations of the business prospects
of ICOM and upon other developments, including, but not limited to, general
economic and business conditions and stock market conditions, the Partnership
may determine from time to time to purchase additional shares of Common Stock,
exercise any of the warrants described in item 5, convert the Revised
Convertible Note (as defined hereinafter) and dispose of all or a portion of any
shares of Common Stock acquired, or a combination thereof.
ITEM 5. Interest in Securities of the Issuer.
The Partnership beneficially owns 1,872,777 shares of Common Stock, which
represents 7.2% of the outstanding shares of Common Stock. The Partnership has
the sole power to vote and dispose the Shares.
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<PAGE>
Effective February 12, 1998, ICOM and St. James Capital Partners, L.P. ("SJCP"),
an affiliate of the Partnership, entered into a financing arrangement pursuant
to which ICOM agreed to issue 1,500,000 warrants and a Convertible Promissory
Note in the principal amount of $15,000,000 (the "Convertible Note") in exchange
for $15,000,000 (the "Financing"). The unpaid principal amount of the
Convertible Note, together with any unpaid interest accrued thereon, is
convertible in whole or in part at any time into shares of Common Stock based on
a conversion price of $9.082, subject to adjustment for certain dilutive events.
SJCP has the right to acquire up to 1,651,618.5 shares of Common Stock upon the
conversion of the Convertible Note. The terms and conditions of the Financing
are governed by that certain Agreement of Purchase and Sale dated February 12,
1998, by and between ICOM and SJCP (the "Purchase Agreement"). The Financing
closed on February 12, 1998.
Additionally, on February 12, 1998, ICOM and SJCP executed a Registration Rights
Agreement pursuant to which ICOM granted to SJCP certain demand and piggy-back
registration rights with respect to the Shares that are issuable upon conversion
of the Convertible Note and upon exercise of the warrants issued in connection
with the Financing (the "Registration Rights Agreement"). The Registration
Rights Agreement contains standard standstill and indemnification provisions and
contains a provision providing for the amendment of the Registration Rights
Agreement to incorporate the terms of any more favorable registration rights
granted to a third party by ICOM.
An Assignment and Acceptance was executed as of March 30, 1998 assigning to the
Partnership 13/15ths of SJCP's interest in and to all of SJCP's rights, and 100%
of SJCP's obligations under the Purchase Agreement and transaction documents as
of March 30, 1998 including, without limitation, such percentage interest in
SJCP's obligation to make advances, the advances owing to SJCP, the Convertible
Note held by SJCP, the warrants held by SJCP, SJCP's interest in collateral, and
SJCP's registration rights in respect of Common Stock.
Effective as of April 2, 1998, ICOM and the Partnership executed a revised
Convertible Promissory Note in the principal amount of $13,000,000 (the "Revised
Convertible Note") with an outstanding balance of $8,000,000. The terms and
conditions of the Revised Convertible Note are governed by the Assignment and
Acceptance dated March 30, 1998. Up to 880,863 shares of Common Stock shall be
issuable upon conversion of the Revised Convertible Note within the next sixty
(60) days. The Revised Convertible Note bears interest at a rate of seven
percent (7%) per annum and may be converted by the Partnership at any time. ICOM
has the right to require conversion of the Revised Convertible Note if the
market price for a share of Common Stock as of the last trade for fifteen (15)
out of seventeen (17) consecutive trading days is $13.50 or more.
1,200,000 of SJCP's 1,500,000 warrant shares were assigned to the Partnership
under the terms of the Assignment and Acceptance dated March 30, 1998. Such
warrants are presently exercisable at a price of $7.50 per share, subject to
adjustment for certain dilutive events, and are evidenced by a Warrant
Certificate dated April 2, 1998. These warrants expire on February 12, 2001.
Following the Assignment and Acceptance executed as of March 30, 1998 between
SJCP and the Partnership, the Partnership assigned a portion of the Revised
Convertible Note ($800,000) and warrants to purchase shares of Common Stock
(120,000 warrant shares) to an unrelated third party leaving the Partnership
with a Revised Convertible Note of $12,200,000, with an outstanding balance of
$7,200,000
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<PAGE>
convertible into 792,777 shares of Common Stock and warrants to purchase
1,080,000 shares of Common Stock.
SJMB and the limited partners of the Partnership are entitled to profits and
losses resulting from any disposition of the Shares in accordance with the
provisions of the Partnership's Agreement of Limited Partnership (the
"Partnership Agreement").
ITEM 6. Contracts, Arrangements, Understandings, or Relationships with
Respect to Securities of the Issuer.
The Partnership beneficially owns 1,872,777 shares of Common Stock, which
represents 7.2% of the outstanding shares of Common Stock. The Partnership has
the sole power to vote and dispose the Shares.
Effective February 12, 1998, ICOM and St. James Capital Partners, L.P. ("SJCP"),
an affiliate of the Partnership, entered into a financing arrangement pursuant
to which ICOM agreed to issue 1,500,000 warrants and a Convertible Promissory
Note in the principal amount of $15,000,000 (the "Convertible Note") in exchange
for $15,000,000 (the "Financing"). The unpaid principal amount of the
Convertible Note, together with any unpaid interest accrued thereon, is
convertible in whole or in part at any time into shares of Common Stock based on
a conversion price of $9.082, subject to adjustment for certain dilutive events.
SJCP has the right to acquire up to 1,651,618.5 shares of Common Stock upon the
conversion of the Convertible Note. The terms and conditions of the Financing
are governed by that certain Agreement of Purchase and Sale dated February 12,
1998, by and between ICOM and SJCP (the "Purchase Agreement"). The Financing
closed on February 12, 1998.
Additionally, on February 12, 1998, ICOM and SJCP executed a Registration Rights
Agreement pursuant to which ICOM granted to SJCP certain demand and piggy-back
registration rights with respect to the Shares that are issuable upon conversion
of the Convertible Note and upon exercise of the warrants issued in connection
with the Financing (the "Registration Rights Agreement"). The Registration
Rights Agreement contains standard standstill and indemnification provisions and
contains a provision providing for the amendment of the Registration Rights
Agreement to incorporate the terms of any more favorable registration rights
granted to a third party by ICOM.
An Assignment and Acceptance was executed as of March 30, 1998 assigning to the
Partnership 13/15ths of SJCP's interest in and to all of SJCP's rights, and 100%
of SJCP's obligations under the Purchase Agreement and transaction documents as
of March 30, 1998 including, without limitation, such percentage interest in
SJCP's obligation to make advances, the advances owing to SJCP, the Convertible
Note held by SJCP, the warrants held by SJCP, SJCP's interest in collateral, and
SJCP's registration rights in respect of Common Stock.
Effective as of April 2, 1998, ICOM and the Partnership executed a revised
Convertible Promissory Note in the principal amount of $13,000,000 (the "Revised
Convertible Note") with an outstanding balance of $8,000,000. The terms and
conditions of the Revised Convertible Note are governed by the Assignment and
Acceptance dated March 30, 1998. Up to 880,863 shares of Common Stock shall be
issuable upon conversion of the Revised Convertible Note within the next sixty
(60) days. The Revised Convertible Note bears interest at a rate of seven
percent (7%) per annum and may be converted by the Partnership at any time. ICOM
has the right to require conversion of the Revised Convertible Note if the
market price
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<PAGE>
for a share of Common Stock as of the last trade for fifteen (15) out of
seventeen (17) consecutive trading days is $13.50 or more.
1,200,000 of SJCP's 1,500,000 warrant shares were assigned to the Partnership
under the terms of the Assignment and Acceptance dated March 30, 1998. Such
warrants are presently exercisable at a price of $7.50 per share, subject to
adjustment for certain dilutive events, and are evidenced by a Warrant
Certificate dated April 2, 1998. These warrants expire on February 12, 2001.
Following the Assignment and Acceptance executed as of March 30, 1998 between
SJCP and the Partnership, the Partnership assigned a portion of the Revised
Convertible Note ($800,000) and warrants to purchase shares of Common Stock
(120,000 warrant shares) to an unrelated third party leaving the Partnership
with a Revised Convertible Note of $12,200,000, with an outstanding balance of
$7,200,000 convertible into 792,777 shares of Common Stock and warrants to
purchase 1,080,000 shares of Common Stock.
SJMB and the limited partners of the Partnership are entitled to profits and
losses resulting from any disposition of the Shares in accordance with the
provisions of the Partnership Agreement. Except as set forth above, no contract,
agreement, understanding or relationship relates to the transfer or voting of
any security, finder's fee, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, divisions of profits or loss, or the giving or
withholding of proxies.
ITEM 7. Exhibits.
Exhibit No. Description of Exhibit
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1 Assignment and Acceptance dated March 30, 1998
by and between SJCP and the Partnership
2 Joint Acquisition Statement Pursuant to Rule
13D-(1)(f)(1)
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
SJMB, L.P.
BY: SJMB, L.L.C.,
general partner
June 30, 1998
--------------------------------------
Date
/s/ JAMES H. HARRISON
--------------------------------------
Signature
JAMES H. HARRISON, Vice President
--------------------------------------
Name/Title
SJMB, L.L.C.
June 30, 1998
--------------------------------------
Date
/s/ JAMES H. HARRISON
--------------------------------------
Signature
JAMES H. HARRISON, Vice President
--------------------------------------
Name/Title
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EXHIBIT 1
ASSIGNMENT AND ACCEPTANCE
Dated: March 30, 1998
Reference is made to the Agreement for Purchase and Sale dated as of
February 12, 1998 (as the same may be amended or modified from time-to-time,
the "Agreement") between INTELECT COMMUNICATIONS, INC., a Delaware
corporation ("Borrower") and ST. JAMES CAPITAL PARTNERS, L.P. ("Assignor").
Capitalized terms not otherwise defined in this Assignment and Acceptance
shall have the meanings assigned to them in the Agreement.
Pursuant to the terms of the Agreement, St. James Capital Partners,
L.P. wishes to assign and delegate 13/15ths of its rights and 100% of its
obligations under the Agreement. Therefore, St. James Capital Partners, L.P.
("Assignor") and SJMB, L.P. ("Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, without recourse to the Assignor
and without representation or warranty except for the representations and
warranties specifically set forth in clauses (i) and (ii) of Section 2, 13/15ths
of its interest in and to all of the Assignor's rights, and 100% of Assignor's
obligations, under the Agreement and the Transaction Documents as of the
Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor's obligation to make Advances, the Advances
owing to the Assignor, the Note held by the Assignor, the Warrants held by the
Assignor, the Assignor's interest in the Collateral, and the Assignor's
registration rights in respect of Common Stock. The Assignor and the Assignee
agree that this Assignment shall convey an interest in outstanding advances
under the Note as of the date hereof equal to $1,000,000, and conveys to
Assignee, and Assignee hereby assumes, all remaining obligations to make
advances under the Note.
2. The Assignor (i) represents and warrants that, prior to executing this
Assignment and Acceptance, its obligation to make further Advances under the
Agreement is $12,000,000, and the aggregate outstanding principal amount of
Advances owed to it by the Borrower is $3,000,000; (ii)
<PAGE>
represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear
of any adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or representations
made in or in connection with the Agreement or any other Transaction Document or
the execution, legality, validity, enforceability, genuineness, sufficiency, or
value of the Agreement or any other Transaction Document or any other instrument
or document furnished pursuant thereto; (iv) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or any Subsidiary or the performance or observance by the Borrower of
any of its obligations under the Agreement or any other Transaction Document or
any other instrument or document furnished pursuant thereto;(v) agrees to
deliver the Note to the Borrower to exchange such Note for a new Note dated
April 2, 1998, in the principal amount of $13,000,000 payable to the order of
the Assignee; (vi) and agrees to deliver the Warrants issued by Borrower to the
Assignor to exchange such Warrants for replacement Warrants in favor of the
Assignee in respect of the Borrower's Common Stock.
3. The Assignee (i) confirms that it has received a copy of the Agreement
and the other Transaction Documents, and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance and (ii) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Agreement or any other Transaction Document are required to be performed by it
as a Purchaser.
4. The effective date for this Assignment and Acceptance shall be March
30, 1998 (the "Effective Date").
5. As of the Effective Date, (i) the Assignee shall be a Purchaser under
the Agreement for all purposes, and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Purchaser thereunder and
(ii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Agreement.
2
<PAGE>
6. From and after the Effective Date, the Borrower shall make all payments
under the Agreement and the Note in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest, and
commitment fees) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Agreement and the Note for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed and
enforced in accordance with, the laws of the State of Texas.
The parties hereto have caused this Assignment and Acceptance to be duly
executed as of the date first above written.
ASSIGNOR:
ST. JAMES CAPITAL PARTNERS, L.P.
By: St. James Capital Corp.,
its General Partner
By:/s/ JAY BROWN
Name: JAY BROWN
Title: VICE-PRESIDENT
ASSIGNEE:
SJMB, L.P.
By: SJMB, L.L.C., its General Partner
By:/s/ JAY BROWN
Name: JAY BROWN
Title: VICE-PRESIDENT
3
<PAGE>
ACKNOWLEDGED
THIS 2nd DAY OF APRIL, 1998.
INTELECT COMMUNICATIONS, INC.
By:/s/ HERMAN M. FRIETSCH
Name: HERMAN M. FRIETSCH
Title: CHAIRMAN AND CEO
4
EXHIBIT 2
Joint Acquisition Statement
Pursuant to Rule 13d-(1)(f)(1)
The undersigned acknowledge and agree that the foregoing statement on Schedule
13D is filed on behalf of each of the undersigned and that all subsequent
amendments to this statement on Schedule 13D shall be filed on behalf of each of
the undersigned without the necessity of filing additional joint acquisition
statements. The undersigned acknowledge that each shall be responsible for the
timely filing of such amendments, and for the completeness and accuracy of the
information concerning him or it contained therein, but shall not be responsible
for the completeness and accuracy of the information concerning the others,
except to the extent that he or it knows or has reason to believe that such
information is inaccurate.
Dated: June 30, 1998
SJMB, L.L.C.
By: /s/ JAMES H. HARRISON
Name: James H. Harrison
Title: Vice President
SJMB, L.P.
By: SJMB, L.L.C.,
General Partner
By: /s/ JAMES H. HARRISON
Name: James H. Harrison
Title: Vice President
