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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 15)*
INCOMNET, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK
- --------------------------------------------------------------------------------
(Title of Class of Securities)
453365207
----------------------------------------------
(CUSIP Number)
John P. Casey, 10220 River Road, Suite 115, Potomac, MD 20854 (301) 983-5000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
November 5, 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 that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on 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 (however, see the
Notes).
<PAGE> 2
SCHEDULE 13D
<TABLE>
<S> <C>
- --------------------------- -------------------------
CUSIP NO. 453365207 PAGE 2 OF 7 PAGES
- --------------------------- -------------------------
- -------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JOHN P. CASEY - SS# ###-##-####
- -------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
- -------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
14,495,474*
--------------------------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 102,000 (children's trust; 1/3 voting trustee)
OWNED BY EACH
REPORTING
PERSON WITH
--------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
14,495,474*
--------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
102,000 (children's trust; 1/3 voting trustee)
- -------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,597,474*
- -------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.65% (See Item 5)*
- -------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- -------------------------------------------------------------------------------------------------------
</TABLE>
*Includes 8,459,970 shares of Incomnet Common Stock issuable on conversion of
725.473 shares of Incomnet Series A Convertible Preferred Stock and 872.738
shares of Incomnet Series B Preferred Stock (collectively, the "Preferred
Shares") which Mr. Casey purchased on November 5, 1998 under the Option
Agreement dated July 15, 1998 described in Amendment No. 6 to Mr. Casey's
Statement. Incomnet does not currently have sufficient authorized but unissued
shares of Common Stock to effect the conversion of the Preferred Shares into
common stock. Further, Mr. Casey is obligated, pursuant to the terms of the
Board Change Agreement dated August 28, 1998 to hold the Preferred Shares until
November 4, 1999 (the "Redemption Period") during which time the Company plans
to redeem the Preferred Shares if it is financially able to do. If the Company
is not able to redeem the Preferred Shares during the Redemption Period,
Mr. Casey is obligated to convert the Preferred Shares into Common Stock and
offer the Common Stock to all shareholders of Incomnet on a pro-rata basis at
an offering price representing no actual profit to Mr. Casey.
<PAGE> 3
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Page 3 of 7 Pages
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This Statement is the fifteenth Amendment to the Statement on Schedule
13D filed on April 7, 1998 (as previously amended, the "Statement") with the
Securities and Exchange Commission by Mr. John P. Casey in connection with his
beneficial ownership of shares (the "Shares") of common stock of Incomnet, Inc.
("Incomnet" or the "Issuer"). All capitalized terms used and not defined in this
Amendment No. 15 have the meanings given to them in the Statement.
Item 1. Security and Issuer.
This Statement relates to the Common Stock of Incomnet and Series A and
Series B Preferred Stock that is convertible into Common Stock. On November 5,
1998 Mr. Casey exercised his Option to purchase 725.473 shares of Series A
Convertible Preferred Stock and 872.738 shares of Series B Convertible Preferred
Stock. Incomnet's executive offices are located at 2801 Main Street, Irvine,
California 92614.
Item 3. Source and Amount of Funds or Other Consideration.
On November 5, 1998, Mr. Casey purchased an aggregate of 725.473 shares
of Incomnet Series A Convertible Preferred Stock and 872.738 shares of Incomnet
Series B Preferred Stock pursuant to the Option Agreement first described in
Amendment No. 6 to Mr. Casey's Statement (the "Preferred Shares"). Mr. Casey
purchased the Preferred Shares using funds borrowed from by Ironwood Telecom LLC
evidenced by a Secured Promissory Note. Ironwood Telecom LLC is a Colorado
limited liability company ("Ironwood") that currently invests in
telecommunications related businesses. The owner of a majority of the equity of
Ironwood is Quince Associates, a Maryland investment partnership.
<PAGE> 4
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Page 4 of 7 Pages
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Promissory Note is secured by a Stock Pledge Agreement whereby Mr. Casey has
pledged the Preferred Shares as collateral for payment under the Secured
Promissory Note. National Telephone & Communications, Inc., Incomnet's
wholly-owned subsidiary, has guaranteed payment by Mr. Casey under the Secured
Promissory Note. The Secured Promissory Note bears simple interest at 18% and
has no prepayment penalties. The Secured Promissory Note is due on the earlier
of the redemption of the Preferred Shares by Incomnet or sale of the Common
Stock underlying the Preferred Shareholders to Incomnet's shareholders as
described in Item 5 below.
Item 4. Purpose of Transaction.
As previously disclosed in Amendment No. 10 to the Statement, Mr. Casey
had agreed, pursuant to the Board Change Agreement, that Incomnet, if it is
financially and legally able to do so, will be obligated to purchase the
Preferred Shares within one year following the exercise of the option to
purchase the Preferred Shares (the "Redemption Period"). If Incomnet is unable
to purchase the Preferred Shares during the Redemption Period, Mr. Casey will
be obligated to proceed to offer the common stock underlying the Preferred
Shares on a pro rata basis to shareholders of record as of a date to be
determined in the future. Such common stock will be offered at a per share
price representing no actual profit to Mr. Casey. It is Mr. Casey's intent to
allow the Preferred Shares to be redeemed during the Redemption Period or offer
the Preferred Shares to the shareholders as agreed to in the Board Change
Agreement.
Item 5. Interest in Securities of the Issuer.
(a) Mr. Casey is the beneficial owner of 6,317,503 shares of Incomnet
Common Stock and may be deemed to be the beneficial owner of 8,459,970
additional shares of Common Stock issuable on conversion of the Preferred Shares
purchased from Sellers on November 5, 1998. Sellers had tendered the Preferred
Shares for conversion into Incomnet Common Stock in June, 1998. Incomnet did not
have sufficient authorized Common Stock to convert Sellers' Preferred Shares.
Upon learning of the Company's inability to convert the Preferred Shares,
Sellers rescinded their conversion and reserved all of their rights against
Incomnet.
As described in Amendment No. 6 to Mr. Casey's Statement, on July 15,
1998, Mr. Casey entered into the Option Agreement to purchase the Preferred
Shares from Sellers.
As described in Amendment No. 13 to Mr. Casey's Statement, on
September 29, 1998, Mr. Casey, the then board of directors of Incomnet and
Incomnet completed the Board Change Agreement pursuant to which Mr. Casey agreed
to exercise his Option to purchase the Preferred Shares and hold the Preferred
Shares for one year to give Incomnet the ability to redeem the Preferred Shares
at a price representing no actual profit to Mr. Casey. The Board Change
Agreement further provided that if Incomnet were financially unable to redeem
the Preferred Shares by the end of such one-year period, Mr. Casey would be
required to convert the Preferred Shares into 8,459,970 shares of Common Stock
(i.e., the number of shares of Common Stock that Sellers would have received in
June, 1998 had Incomnet not run out of authorized Common Stock) and offer such
2
<PAGE> 5
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Page 5 of 7 Pages
-----------------
Common Stock on a pro rata basis to all Incomnet shareholders at a price
representing no actual profit to Mr. Casey.
Incomnet continues to have no authorized but unissued Common Stock. An
amendment to Incomnet's Articles of Incorporation approved by a vote of a
majority of the outstanding shares of Incomnet is needed to effect an increase
in the authorized Common Stock. Mr. Casey has agreed to vote his stock in favor
of such an increase.
Assuming conversion of all of the Preferred Shares into Common Stock
together with the Common Stock beneficially owned by Mr. Casey, Mr. Casey may be
deemed to own 14,597,474 shares of Incomnet Common Stock. Those shares represent
44.65% of the outstanding shares of Common Stock assuming: (i) 20 million shares
of Incomnet Common Stock currently authorized and outstanding; (ii) 8,459,970
shares that could be issued to Mr. Casey upon conversion of the Preferred Shares
once an increase in the number of authorized shares of Common Stock has been
approved by shareholders of Incomnet and assuming Incomnet does not redeem the
Preferred Shares; (iii) 1,300,000 shares that are issuable upon on conversion of
restricted preferred stock to Denis Richard, Incomnet's President and Chief
Executive Officer, following approval of an increase in the number of authorized
shares of Common Stock; (iv) Preferred Shares convertible into 2,327,836 shares
of Common Stock that are owned by Ironwood (as a result of settlements with
certain other former preferred stock holders that were not parties to the Option
Agreement with Mr. Casey) but are expected to be redeemed by Incomnet if
Incomnet is financially able to redeem such shares; and (v) 600,000 shares of
Common Stock that are issuable upon conversion of restricted preferred stock to
three holders of preferred stock who were not parties to Mr. Casey's Option
Agreement.
(b) Mr. Casey has sole voting power over 6,035,504 shares of Common
Stock and, if he is deemed to own the Common Stock underlying the Preferred
Shares, an additional 8,459,970 shares of Common Stock. The Preferred Shares
generally are not entitled to vote on any matter. In addition, Mr. Casey has
shared voting power over 102,000 shares of Common Stock held in various accounts
for the benefit of his minor children.
(c) See Items 3 and 5 above. Mr. Casey paid an aggregate of $2,424,790
for the Preferred Shares. Mr. Casey does not know how the purchase price for the
Preferred Shares was allocated among the Sellers or the per share price of
the Preferred Shares.
(d) Not applicable.
(e) Not applicable.
3
<PAGE> 6
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Page 6 of 7 Pages
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Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
See Item 5 above. Under the Board Change Agreement and pursuant to
letter agreements with the Sellers and with Ellen Cohen and Martin Fabrikant,
Mr. Casey has agreed to vote all of his shares of Incomnet stock in favor of an
increase in the number of authorized shares of Common Stock.
Item 7. Material to be filed as Exhibits.
Exhibit 1 Secured Promissory Note by John P. Casey dated November 4, 1998.
Exhibit 2 Stock Pledge Agreement between John P. Casey and Ironwood Telecom
LLC dated November 4, 1998.
Exhibit 3 Guaranty of Stock Pledge Agreement by National Telephone &
Communications, Inc. dated November 4, 1998.
Exhibit 4 Letter from Mr. Casey to Sellers regarding voting of Mr. Casey's
Incomnet shares in favor of an increase in the number of authorized
shares of Common Stock.
Exhibit 5 Letter from Mr. Casey to Ellen Cohen and Mark Fabrikant regarding
voting of Mr. Casey's Incomnet shares in favor of an increase in the
number of authorized shares of Common Stock.
4
<PAGE> 7
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Page 7 of 7 Pages
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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.
/s/ JOHN P. CASEY
Date: November 5, 1998 ------------------------------------------
John P. Casey
<PAGE> 1
EXHIBIT 1
SECURED PROMISSORY NOTE
$2,124,790.00 November 4, 1998
FOR VALUE RECEIVED, the undersigned, John P. Casey (the "Borrower"),
HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of Ironwood Telecom, LLC, a
Colorado limited liability company (the "Lender"), the principal sum of TWO
MILLION ONE HUNDRED TWENTY FOUR THOUSAND SEVEN HUNDRED NINETY DOLLARS
($2,124,790.00) (the "Principal Amount") plus all accrued and unpaid interest
and fees thereon on the Maturity Date (defined below).
1. PURCHASE OF COHEN PREFERRED STOCK. The purpose of the loan evidenced
by this Secured Promissory Note (the "Loan") and the sole permitted use of the
proceeds of the Loan is to finance the payment by the Borrower of the Option
Price (as defined in the Option Agreement) to Robert Cohen, Stefanie Rubin,
Allyson Cohen, Jeffery Cohen, Alan Cohen, Lenore Katz, Broadway Partners and
Meryl Cohen, individually and as custodian for Gabrielle Cohen, Jaclyn Cohen,
Erica Cohen and Nicole Cohen (the "Cohen Group") pursuant to the Option
Agreement, dated July 15, 1998, as extended, among the Borrower and the members
of the Cohen Group (the "Option Agreement"). Upon Borrower's payment of the
Option Price to the Cohen Group, the Cohen Group will transfer to the Borrower
all of the Series A and Series B Preferred Stock of Incomnet, Inc., a California
corporation ("Incomnet") owned by the Cohen Group (the "Cohen Preferred Stock"),
pursuant to the terms and conditions set forth in the Option Agreement. The
Series A and Series B Preferred Stock of Incomnet owned by the Cohen Group is
set forth on Schedule 1 to this Secured Promissory Note.
2. PAYMENTS
(a) As set forth above, the Principal Amount and all accrued and
unpaid interest and fees thereon shall be due and payable on the Maturity Date.
As used herein, "Maturity Date" means the earlier of (i) date on which Incomnet
redeems the Cohen Preferred Stock from the Borrower on the terms and conditions
set forth in the Board Change Agreement, dated August 28, 1998, among Incomnet,
the Borrower and certain other parties (the "Board Change Agreement") and (ii)
the date on which the Borrower completes the rights offering described in
Section 3(iii) hereof.
(b) In addition to paying the Principal Amount on the Maturity Date,
the Borrower further promises to pay to the Lender interest on the Principal
Amount outstanding hereunder from time to time at the rate of 18% per annum
calculated on the
<PAGE> 2
basis of the actual days elapsed in a year of 365 days. Interest shall be
payable on the Maturity Date, together with all of the Principal Amount and fees
thereon, if any. Upon the occurrence of an Event of Default, the interest rate
applicable to the Principal Amount outstanding of the occurrence of the Event of
Default shall, at the option of the Lender, be 21%.
(c) The Secured Promissory Note is subject to prepayment in whole or
in part at any time in increments of $100,000 without premium or penalty.
Prepayments shall be applied, first, to all interest then due and payable and,
then, to the Principal Amount. Both principal and interest are payable in lawful
money of the United States of America and in immediately available funds to the
Lender.
(d) This Secured Promissory Note is secured by certain collateral
more specifically described in the Stock Pledge Agreement executed by the
Borrower on the date hereof (the "Stock Pledge Agreement").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Borrower makes the following representations and warranties to the
Lender:
(i) This Secured Promissory Note in is the legal, valid and
binding agreement of Borrower, enforceable against Borrower in
accordance with its terms, subject as to enforcement, (i) to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other laws of
general applicability relating to or affecting creditors' rights and
(ii) to general principles of equity, whether such enforcement is
considered in a proceeding at law or in equity;
(ii) This Secured Promissory Note does not conflict with any
law, agreement, or obligation which is material to Borrower and by
which, Borrower is bound; and
(iii) If Incomnet is not legally permitted to redeem the Cohen
Preferred Stock prior to the date that is one year after the date that
the closing of the purchase of the Cohen Preferred Stock by the Borrower
occurs, the Borrower shall undertake a rights offering pursuant to which
the Borrower will offer to Incomnet's shareholders the opportunity to
purchase the Cohen Preferred Stock from the Borrower for a per share
purchase price equal to the per share purchase price (including
financing charges and legal fees) paid by Borrower when he purchased the
Cohen Preferred Stock from the Cohen Group. The transactions
contemplated by this clause (iii) shall be accomplished in accordance
with the Board Charge Agreement.
4. DEFAULT
(a) Events of Default.
2
<PAGE> 3
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
(i) Borrower fails to make a payment under this Secured
Promissory Note when due and such failure continues for 10 consecutive
days after notice thereof from the Lender.
(ii) Borrower fails to meet the conditions of, or fails to
perform any obligation under this Secured Promissory Note or the Stock
Pledge and Security Agreement
(iii) Any representation or warranty under this Secured
Promissory Note or the Stock Pledge and Security Agreement or any
instrument or certificate executed pursuant to this Agreement or in
connection with any transaction contemplated hereby shall prove to have
been false or misleading in any material respect when made or when
deemed to have been made.
(iv) Borrower files a bankruptcy petition, a bankruptcy petition
is filed against Borrower or Borrower makes a general assignment for the
benefit of creditors. The default will be deemed cured if any bankruptcy
petition filed against Borrower is dismissed within a period of one
hundred twenty (120) days after the filing.
(b) Remedies.
Upon and after the occurrence of an event of Default, the Lender shall
have all of the following rights and remedies:
(i) All obligations and Indebtedness hereunder may, at the
option of Bank and without demand, notice, or legal process of any kind,
be declared, and immediately shall become, due and payable; and
(ii) All of the rights and remedies of a secured party under the
California Commercial Code or other applicable law, all of which rights
and remedies shall be cumulative, and not exclusive, to the extent
permitted by law, in addition to any other rights and remedies contained
in this Agreement and in any of the documents or agreements executed in
connection herewith.
5. CONDITIONS
The effectiveness of this Secured Promissory Note is conditioned
upon receipt by the Lender of (i) a fully executed Stock Pledge and Security
Agreement and each item to be delivered pursuant thereto and (ii) a fully
executed Guarantee from National Telephone & Communication, Inc.
3
<PAGE> 4
6. USE OF PROCEEDS
The Borrower agrees that it shall apply all of the proceeds of the
loan evidenced by this Secured Promissory Note to purchase the Cohen Preferred.
7. FEES AND EXPENSES
The Borrower shall pay to the Lender on demand all costs and expenses
that the Lender pays or incurs in connection with the negotiation, preparation,
consummation, administration, enforcement, and termination of this Secured
Promissory Note, including, without limitation reasonable attorneys' and
paralegals' fees and disbursements of counsel to the Lender.
8. MISCELLANEOUS
(a) This Agreement is binding on the Borrower's and the Lender's
successors and assigns. The Borrower and the Lender each hereby agree that it
may not assign this Agreement without the prior written consent of the other.
(b) This Secured Promissory Note is the entire agreement of the
Borrower with respect to the subject matter of this Secured Promissory Note.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF COLORADO EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW
SHALL BE USED TO APPLY THE LAWS OF ANY OTHER STATE OR JURISDICTION.
/s/ JOHN P. CASEY
------------------------------------
JOHN P. CASEY
4
<PAGE> 1
EXHIBIT 2
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of November 4,
1998, is made between John P. Casey (the "Borrower") and Ironwood Telecom, LLC,
a Colorado limited liability company ("Lender").
BACKGROUND
The Borrower has issued to the Lender on the date hereof a Secured
Promissory Note in the original principal amount of Two Million One Hundred
Twenty Four Thousand Seven Hundred Ninety Dollars ($2,124,790.00) (as amended,
modified, renewed or extended from time to time, the "Secured Promissory Note").
The purpose of the loan evidenced by the Secured Promissory Note and the only
permitted use of the proceeds of the Secured Promissory Note is to finance the
payment of the "Option Price" (as defined in the Option Agreement) to the Cohen
Group (as defined in the Secured Promissory Note) pursuant to the terms and
conditions set forth in the Option Agreement, dated July 15, 1998 among the
Borrower and the members of the Cohen Group (the "Option Agreement"). Upon the
Borrower's payment of the Option Price to the Cohen Group, the Cohen Group will
transfer to the Borrower all of the Series A and Series B Preferred Stock of
Incomnet, Inc., a Delaware corporation ("Incomnet") owned by the Cohen Group
pursuant to the terms of the Option Agreement. It is a condition precedent to
the loan under the Secured Promissory Note that the Borrower enter into this
Agreement and pledge to the Lender the Cohen Preferred Stock owned by the
Borrower, to secure the obligations of the Borrower described below.
AGREEMENT
Accordingly, the parties hereto agree as follows:
1
DEFINITIONS; INTERPRETATION
1.1. Terms Defined in Secured Promissory Note.
All capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings assigned to them in the Secured Promissory Note.
1
<PAGE> 2
1.2. Certain Defined Terms.
As used in this Agreement, the following terms shall have the following
meanings:
"Cohen Group" has the meaning given such term in the Background section
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Pledged Collateral" has the meaning set forth in Section 2.1.
"Pledged Shares" means all of the Series A and Series B Preferred Stock
of Incomnet to be transferred to the Borrower pursuant to the terms and
conditions of the Option Agreement upon payment to the Cohen Group of the Option
Price, as more specifically described in Schedule 1.
"Secured Obligations" means the indebtedness, liabilities and other
obligations of the Borrower to the Lender pursuant to the Secured Promissory
Note, all interest accrued thereon, all fees due under the Secured Promissory
Note and all other amounts payable by the Borrower to the Lender thereunder or
in connection therewith, whether now existing or hereafter arising, and whether
due or to become due, absolute or contingent, liquidated or unliquidated,
determined or undetermined.
"Securities Act" means the Securities Act of 1933, as amended.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Colorado; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Pledged Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of Colorado, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
1.3. Terms Defined in UCC.
Where applicable and except as otherwise defined herein, terms used in
this Agreement shall have the meanings assigned to them in the UCC.
2
<PAGE> 3
2
SECURITY INTEREST
2.1. Grant of Security Interest.
As security for the payment and performance of the Secured Obligations,
the Borrower hereby pledges, assigns, transfers, hypothecates and sets over to
the Lender, and hereby grants to the Lender, a security interest in, all of the
Borrower's right, title and interest in, to and under (i) the Pledged Shares and
any certificates and instruments now or hereafter representing the Pledged
Shares, (ii) all proceeds of the Pledged Shares in any form, (iii) all rights,
interests and claims with respect to the Pledged Shares, including under the
Assignment Agreement between Borrower and the Cohen Group dated as of November
5, 1998, (iv) any and all related agreements, instruments and other documents,
and (v) all books, records and other documentation of the Borrower related to
the Pledged Shares, in each case whether presently existing or owned or
hereafter arising or acquired (collectively, the "Pledged Collateral").
2.2. Delivery of Pledged Shares.
The Borrower hereby agrees that upon receipt thereof by the Borrower,
the Borrower will deliver to or for the account of the Lender, at the address
and to the Person to be designated by the Lender, the certificates representing
the Pledged Shares, which shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Lender.
2.3. Delivery of UCC-1 Form.
The Borrower hereby agrees to deliver to or for the account of the
Lender a complete and fully executed UCC-1 form in form and substance
satisfactory to the Lender which describes the Pledged Shares as the property
with respect to which the Borrower has granted a security interest to the
Lender.
2.4. Transfer of Security Interest Other Than by Delivery.
If for any reason Pledged Shares cannot be delivered to or for the
account of the Lender as provided in Section 2.2, the Borrower shall promptly
take such other steps as shall be requested from time to time by the Lender to
effect a transfer of a perfected first priority security interest in and pledge
of the Pledged Shares to the Lender pursuant to the UCC. To the extent
practicable, Borrower shall thereafter deliver the Pledged Collateral to or for
the account of the Lender as provided in Section 2.2.
3
<PAGE> 4
2.5. Continuing Security Interest.
The Borrower agrees that this Agreement shall create a continuing
security interest in and pledge of the Pledged Collateral which shall remain in
effect until terminated in accordance with Section 17.
3
REPRESENTATIONS AND WARRANTIES
In addition to the representations and warranties of the Borrower set
forth in the Secured Promissory Note, which are incorporated herein by this
reference, the Borrower represents and warrants to the Lender that:
3.1. Valid Issuance of Pledged Shares.
All the Pledged Shares have been duly and validly issued, and are and
will be fully paid and non-assessable.
3.2. Ownership of Pledged Collateral.
The Borrower is the legal record and beneficial owner of the Pledged
Collateral, and has and will have good and marketable title thereto, subject to
no Lien except for the pledge and security interest created by this Agreement.
3.3. Enforceability; Priority of Security Interest.
This Agreement creates an enforceable perfected security interest in and
pledge of the Pledged Shares upon delivery thereof pursuant to Section 2.2 (or
upon the taking of such other action with respect thereto as may be requested by
the Lender pursuant to Section 2.4).
4
COVENANTS
In addition to the covenants of the Borrower set forth in the Secured
Promissory Note, which are incorporated herein by this reference, so long as any
of the Secured Obligations remain unsatisfied, the Borrower agrees that:
4.1. Compliance with Laws, Etc.
The Borrower will comply with all laws, regulations and ordinances
relating in a material way to the possession, maintenance and control of the
Pledged Collateral.
4
<PAGE> 5
4.2. Disposition of Pledged Collateral.
The Borrower will not surrender or lose possession of (other than to the
Lender or, with the prior consent of the Lender, to a depository or financial
intermediary), exchange, sell, convey, assign or otherwise dispose of or
transfer the Pledged Collateral or any right, title or interest therein.
4.3. Liens.
The Borrower will not create, incur or permit to exist any Liens upon or
with respect to the Pledged Collateral, other than the security interest of and
pledge to the Lender created by this Agreement.
4.4. Shareholders Agreements.
The Borrower will not enter into any shareholders agreement, voting
trust, proxy agreement or other agreement or understanding which affects or
relates to the voting or giving of written consents with respect to any of the
Pledged Shares.
4.5. Further Assurances.
The Borrower will promptly, upon the written request from time to time
of the Lender, execute, acknowledge and deliver, and file and record, all such
financing statements and other documents and instruments, and take all such
action, as shall be reasonably necessary to carry out the purposes of this
Agreement.
5
ADMINISTRATION OF THE PLEDGED COLLATERAL
5.1. Distributions and Voting Prior to an Event of Default.
Unless an Event of Default shall have occurred the Borrower shall have
the right to vote the Pledged Shares and to retain the power to control the
direction, management and policies of the Company to the same extent as the
Borrower would if the Pledged Shares were not pledged to the Lender pursuant to
this Agreement except to the extent that Borrower is obligated to vote the
Pledged Shares in favor of an increase in the authorized number of the Company's
Common Shares under the terms of the Option Agreement. Any cash dividend on or
other cash distribution, if any, in respect of the Pledged Shares shall be
applied to reduce the Secured Obligations.
5
<PAGE> 6
5.2. General Authority upon an Event of Default.
Upon and after the occurrence of any Event of Default the Lender
shall have the right following prior written notice to the Borrower to vote or
consent to take any action with respect to the Pledged Shares and exercise all
rights of conversion, exchange, subscription or any other rights, privileges or
options pertaining to the Pledged Collateral as if the Lender were the absolute
owner thereof.
5.3. Certain Other Administrative Matters.
The Lender shall at all times have the right to exchange uncertificated
Pledged Collateral for certificated Pledged Collateral, and to exchange
certificated Pledged Collateral for certificates of larger or smaller
denominations, for any purpose consistent with this Agreement.
6
LENDER PERFORMANCE OF BORROWER OBLIGATIONS
The Lender may perform or pay any obligation which the Borrower has
agreed to perform or pay under or in connection with this Agreement if Borrower
has failed to perform or pay such obligation, and the Borrower shall reimburse
the Lender on demand for any amounts paid by the Lender pursuant to this Section
6.
7
LENDER'S DUTIES
Notwithstanding any provision contained in this Agreement, the Lender
shall have no duty to exercise any of the rights, privileges or powers afforded
to it and shall not be responsible to the Borrower or any other Person for any
failure to do so or delay in doing so. Beyond the exercise of reasonable care to
assure the safe custody of the Pledged Shares while held hereunder and the
accounting for moneys actually received by the Lender hereunder, the Lender
shall have no duty or liability to exercise or preserve any rights, privileges
or powers pertaining to the Pledged Shares.
6
<PAGE> 7
8
REMEDIES
8.1. Remedies.
Upon the occurrence of any Event of Default, the Lender shall have, in
addition to all other rights and remedies granted to it in this Agreement or the
Secured Promissory Note, all rights and remedies of a secured party under the
UCC and other applicable laws. Without limiting the generality of the foregoing,
the Borrower agrees that any item of the Pledged Collateral may be sold for cash
or on credit or for future delivery without assumption of any credit risk, in
any number of lots at the same or different times, at any exchange, brokers'
board or elsewhere, by public or private sale, and at such times and on such
terms, as the Lender shall determine. The Borrower hereby agrees that the
sending of notice by ordinary mail, postage prepaid, to the address of the
Borrower set forth in the Secured Promissory Note, of the place and time of any
public sale or of the time after which any private sale or other intended
disposition is to be made, shall be deemed reasonable notice thereof if such
notice is sent ten days prior to the date of such sale or other disposition or
the date on or after which such sale or other disposition may occur. The Lender
shall have the right upon any such public sale, and, to the extent permitted by
law, upon any such private sale, to purchase the whole or any part of the
Pledged Collateral so sold, free of any right or equity of redemption, which
right or equity of redemption the Borrower hereby releases to the extent
permitted by law.
8.2. Application of Proceeds.
The cash proceeds actually received from the sale or other disposition
or collection of Pledged Collateral, and any other amounts of the Pledged
Collateral (including any cash contained in the Pledged Collateral) the
application of which is not otherwise provided for herein, shall be applied as
provided in the Secured Promissory Note. Any surplus thereof which exists after
payment and performance in full of the Secured Obligations shall be promptly
paid over to the Borrower or otherwise disposed of in accordance with the UCC or
other applicable law. The Borrower shall remain liable to the Lender for any
deficiency which exists after any sale or other disposition or collection of
Pledged Collateral.
7
<PAGE> 8
9
NOTICES
All notices or other communications hereunder shall be given in the
manner and to the addresses designated in writing by each party hereto.
10
BINDING EFFECT
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the Borrower, the Lender and their respective successors and
assigns.
11
GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF COLORADO, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF
LAW AND TO THE EXTENT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS
HEREUNDER, OR THE REMEDIES HEREUNDER, IN RESPECT OF ANY PLEDGED COLLATERAL ARE
GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN COLORADO.
12
ENTIRE AGREEMENT; AMENDMENT
This Agreement contains the entire agreement of the parties with respect
to the subject matter hereof and shall not be amended except by the written
agreement of the parties as provided in the Secured Promissory Note.
13
SEVERABILITY
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under all applicable laws and
regulations. If,
8
<PAGE> 9
however, any provision of this Agreement shall be prohibited by or invalid under
any such law or regulation in any jurisdiction, it shall, as to such
jurisdiction, be deemed modified to conform to the minimum requirements of such
law or regulation, or, if for any reason it is not deemed so modified, it shall
be ineffective and invalid only to the extent of such prohibition or invalidity
without affecting the remaining provisions of this Agreement, or the validity or
effectiveness of such provision in any other jurisdiction.
14
COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.
15
INCORPORATION OF PROVISIONS
OF THE SECURED PROMISSORY NOTE
To the extent the Secured Promissory Note contains provisions which are
applicable to this Stock Pledge Agreement, such provisions are incorporated
herein by this reference.
16
NO INCONSISTENT REQUIREMENTS
The Borrower acknowledges that this Agreement and the Secured Promissory
Note may contain covenants and other terms and provisions variously stated
regarding the same or similar matters, and agrees that all such covenants, terms
and provisions are cumulative and all shall be performed and satisfied in
accordance with their respective terms.
17
TERMINATION
Upon payment and performance in full of all Secured Obligations, this
Agreement shall terminate and the Lender shall promptly redeliver to the
Borrower any of the Pledged Collateral in the Lender's possession and shall
execute and deliver to the Borrower such documents and instruments reasonably
requested by the Borrower as shall
9
<PAGE> 10
be necessary to evidence termination of all security interests given by the
Borrower to the Lender hereunder.
18
FEES AND COSTS
The Borrower shall pay to the Lender on demand all costs and
expenses that the Lender pays or incurs in connection with the negotiation,
preparation, consummation, administration, enforcement, and termination of this
Stock Pledge Agreement, including, without limitation reasonable attorneys' and
paralegals' fees and disbursements of counsel to the Lender.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
"BORROWER"
/s/ JOHN P. CASEY
---------------------------------------------
John P. Casey
"LENDER"
IRONWOOD TELECOM, LLC
By /s/ DONALD V. BELANTI
-----------------------------------------
Title: Member
10
<PAGE> 1
EXHIBIT 3
GUARANTY
This Guaranty (the "Guaranty") is made and entered into as of November
4, 1998, (the "Effective Date"), by National Telephone & Communications, Inc., a
Delaware corporation ("Guarantor"), in favor of Ironwood Telecom LLC, a Colorado
limited liability company ("Lender"). This Guaranty is executed and delivered in
connection with a Secured Promissory Note in the original principal amount of
$2,124,790 also dated as of the Effective Date (the "Secured Promissory Note")
and secured by the Stock Pledge Agreement dated as of the Effective Date (the
"Loan Agreement") given to Lender by John P. Casey ("Borrower"). The Secured
Promissory Note, Guaranty, and Loan Agreement are collectively referred to as
the Loan Documents.
Guarantor, for the benefit of Lender, agrees as set forth below.
1. Definitions.
Any capitalized term not otherwise defined in this Guaranty shall have
the meaning given to the term in the Loan Agreement.
2. Guaranty.
Guarantor unconditionally guaranties to Lender the timely (whether as
scheduled or upon acceleration) payment and performance by Borrower of the
following (the "Guarantied Obligations"):
2.1.1. The principal, interest and other charges or amounts due
under the Secured Promissory Note and the other Loan Documents (whether by
acceleration or otherwise) and all renewals, extensions, modifications and
rearrangements of any of the Loan Documents;
2.1.2. The other obligations set forth in or arising out of the
Secured Promissory Note and the other Loan Documents;
2.1.3. Any of the forgoing arising out of or in connection with
any renewal, extension or other modification of the Secured Promissory Note or
any of the other Loan Documents;
2.1.4. Any of the foregoing arising after Borrower has commenced
or become subject to any proceeding under the Bankruptcy Code, including any
advances
<PAGE> 2
made to Borrower, any interest that accrues after the filing of the bankruptcy
petition (even if the interest cannot be collected in the proceeding under the
Bankruptcy Code), and attorneys fees.
If Borrower fails to pay or perform any of the Guarantied Obligations, Guarantor
will immediately pay or perform the obligation upon the written request of the
Lender.
3. Lender's Direct Rights.
3.1. This is a guaranty of payment and performance and is not a
guaranty of collection.
3.2. In the event that Borrower fails timely to pay or perform under
the Secured Promissory Note or any of the other Guarantied
Obligations, Lender may enforce its rights under this Guaranty
without first seeking to obtain payment or performance from:
3.2.1. Borrower;
3.2.2. Any other guarantor;
3.2.3. Any collateral Lender may hold for the Secured Promissory
Note or any of the other Loan Documents or any guaranty of the Secured
Promissory Note or any of the other Loan Documents, including this one; or
3.2.4. Exercise of any other remedy or right that Lender may
have.
3.3. In the event Borrower becomes subject to a voluntary or
involuntary proceeding under the Bankruptcy Code, Lender may
immediately pursue its rights under this Guaranty, even though
Lender may be stayed from accelerating or collecting the
Guarantied Obligations as against Borrower.
4. Continuing Guaranty.
This is a continuing guaranty of the Guarantied Obligations and may not
be terminated.
5. No Notice Required.
Lender does not have to notify Guarantor of any of the following events
and Guarantor will not be released or exonerated from its obligations under this
Guaranty if it is not notified of these events:
2
<PAGE> 3
5.1. Borrower's failure to pay timely any amount owed under the
Secured Promissory Note or any of the other Loan Documents or to
pay or perform any of the other Guarantied Obligations;
5.2. Borrower's failure to perform any other obligation under the
Secured Promissory Note, Loan Agreement, or any other Loan
Document;
5.3. Any sale or other disposition of any collateral for the Secured
Promissory Note, for the other Guarantied Obligations, or for
any guaranty of the Secured Promissory Note or any of the
Guarantied Obligations;
5.4. Lender's acceptance of this Guaranty;
5.5. Any renewal, extension or other modification of the Secured
Promissory Note, any other Loan Document, or any of the other
Guarantied Obligations; or
5.6. All other notices to which it might be entitled.
6. Guarantor's Additional Waivers.
Guarantor waives any right it may have to any of the following acts:
6.1. Demand;
6.2. Presentment;
6.3. Diligence;
6.4. Protest;
6.5. Notice of dishonor; and
6.6. Any other notice to which it may be entitled.
7. No Release of Guarantor.
Lender may do any of the following, by action or inaction, without
releasing or exonerating Guarantor from any of its obligations under this
Guaranty:
7.1. Renew, extend or otherwise modify or alter the Secured
Promissory Note, the Loan Agreement, any other Loan Document or
any of the other Guarantied Obligations;
7.2. Release Borrower from any of the Guarantied Obligations;
3
<PAGE> 4
7.3. Sell, release, subordinate, impair, waive or otherwise fail to
obtain or perfect a security interest in, or realize upon, any
collateral for the Secured Promissory Note, any of the other
Guarantied Obligations, or any other guaranty of the Secured
Promissory Note;
7.4. Advance additional funds in its discretion for purposes related
to the purposes set forth in the Loan Agreement;
7.5. From time to time and without first requiring performance on the
part of Borrower and without being required to exhaust any or
all security held by Lender, to look to and require performance
by Guarantor of any obligation on the part of Guarantor to be
performed pursuant to the terms hereof, by action at law or in
equity or both, and further to collect in any such action its
costs and expenses, including reasonable attorneys' fees
incurred in enforcing its rights hereunder;
7.6. Foreclose on any collateral for the Secured Promissory Note or a
guaranty of the Secured Promissory Note in a manner that
diminishes, impairs or precludes the right of Guarantor to enjoy
any rights of subrogation against Borrower or any other
guarantor, or to obtain reimbursement, performance, or
indemnification for payment or performance under this Guaranty;
7.7. Make an election under Bankruptcy Code Section 1111(b)(2);
7.8. Permit or suffer the creation of secured or unsecured credit or
debt under Bankruptcy Code Section 364;
7.9. Permit or suffer the disallowance, avoidance or subordination of
any of the Guarantied Obligations or collateral for any of the
Guarantied Obligations;
7.10. Fail to exercise any right or remedy it may have with respect to
the payment or performance of the Secured Promissory Note, any
of the other Loan Documents or any of the other Guarantied
Obligations; or
7.11. Fail to obtain a guaranty, other assurance of payment, or credit
enhancement from any other person;
8. No Subrogation, etc.
Guarantor waives and shall not seek to exercise any of the following
rights that it may have against Borrower, any other guarantor, or any collateral
provided by Borrower or any other guarantor, for any amounts paid by it, or acts
performed by it, under this Guaranty:
4
<PAGE> 5
8.1. Subrogation;
8.2. Reimbursement;
8.3. Performance;
8.4. Indemnification (including any rights to indemnification set
forth in this Guaranty).
9. Subordination of Guarantor.
9.1. Subordination of Claims.
All principal and interest on all existing and future indebtedness,
liabilities, and obligations of Borrower to Guarantor, whether fixed or
contingent, matured or unmatured, and liquidated or unliquidated (the
"Subordinated Debt") shall at all times be subordinated in right of payment to
the payment and performance of the Secured Promissory Note, the other Loan
Documents and the other Guarantied Obligations.
9.2. Payments.
Upon the occurrence of any default, event of default or Event of Default
under any of the Loan Documents, Guarantor will not accept any payments on any
of the Subordinated Debt. If no default, event of default or Event of Default
has occurred under any of the Loan Documents and Guarantor receives any payment
on the Subordinated Debt, it will hold such payment in trust for the benefit of
Lender; if any default, event of default or Event of Default has occurred under
any of the Loan Documents and Guarantor receives any payment on the Subordinated
Debt, it shall immediately deliver such payment to Lender, but, in either event,
without otherwise reducing or affecting in any manner the liability of Guarantor
under the other provisions of this Guaranty.
9.3. Attorney-in-Fact.
Guarantor appoints Lender Guarantor's attorney-in-fact to file claims,
and receive payments, on behalf of Guarantor with respect to any of the
Subordinated Debt in any proceeding by or against Borrower under the Bankruptcy
Code (including Chapters 7 or 11), any assignment for the benefit of Lenders
made by Borrower, or in any other reorganization or insolvency proceeding.
5
<PAGE> 6
10. Miscellaneous.
10.1. Revival of Debt.
Guarantor's obligations under this Guaranty shall again include amount
returned by Lender in the event that Lender must return any amount paid by
Borrower or any other guarantor of the Secured Promissory Note or of any of the
other Guarantied Obligations because of the application of:
10.1.1. the Bankruptcy Code;
10.1.2. any fraudulent transfer law; or
10.1.3. any law respecting preferences.
10.2. No Marshalling.
Lender has no obligation to marshall any assets in favor of Guarantor,
or against or in payment of:
10.2.1. the Secured Promissory Note,
10.2.2. any of the other Guarantied Obligations, or
10.2.3. any other obligation owed to Lender by Guarantor,
Borrower, or any other person.
10.3. Fees and Costs.
Guarantor will pay all of Lender's fees and costs incurred in enforcing
this Guaranty, including Lender's reasonable attorneys' fees.
10.4. Assignment.
Guarantor may not assign his obligations or liabilities under this
Guaranty. Subject to the preceding sentence, this Guaranty shall be binding upon
the parties hereto and their respective heirs, executors, successors,
representatives and assigns and shall inure to the benefit of the parties hereto
and their respective successors and assigns. Lender may assign its rights under
this Guaranty.
10.5. Applicable Law.
The law of the state of Colorado will apply to the interpretation and
enforcement of this Guaranty except that no doctrine of choice of law shall be
and to apply the laws of any other state or jurisdiction.
6
<PAGE> 7
10.6. Indemnification by Borrower.
Borrower will indemnify Guarantor against, and hold it harmless from,
all payments which Guarantor may at any time be required to make to Lender under
this Guaranty.
10.7. Integration.
This Guaranty is the entire agreement of Borrower and Guarantor with
respect to the subject matter of this Guaranty.
10.8. Rights Cumulative.
All of Lender's rights under this Guaranty are cumulative. The exercise
of any one right does not exclude the exercise of any other right given in this
Guaranty or any other right of Lender not set forth in this Guaranty.
10.9. Rules of Construction.
The following rules shall apply in interpreting the meaning of this
Guaranty:
10.9.1. "Includes" and "including" are not limiting;
10.9.2. "Or" is not exclusive; and
10.9.3. "All" includes "any" and "any" includes "all."
10.10. Severability.
If any provision of this Guaranty is unenforceable, or otherwise
invalid, the remaining provisions of this Guaranty shall be enforced to the
fullest possible extent.
10.11. Notices.
Lender may give any notice to Guarantor at the following address, until
changed in writing by notice given by Borrower:
National Telephone & Communications, Inc.
2801 Main Street
Irvine, California 92614
Telecopy: (949) 251-8085
Attention: Mr. Denis Richard
7
<PAGE> 8
10.12. Joint and Several Liability.
The obligations hereunder of the persons and/or entities constituting
Guarantor under this Guaranty are joint and several.
10.13. Headings; Number; Gender.
Section headings used in this Guaranty are for convenience only. They
are not a part of this Guaranty and shall not be used in construing it. Wherever
appropriate in this Guaranty, the singular shall be deemed to also refer to the
plural, and the plural to the singular, and pronouns of certain genders shall be
deemed to include either or both of the other genders.
10.14. Review of Documents.
Guarantor acknowledges that he has copies of and is fully familiar with
each and every Loan Document.
10.15. Counterparts.
This Guaranty may be executed in counterparts, each of which shall be
deemed an original, but all of which, when taken together, shall be deemed one
and the same agreement.
10.16. Acknowledgment of Waivers.
Guarantor acknowledges that certain provisions of this Guaranty operate
as waivers of rights that Guarantor would otherwise have under applicable law.
IN WITNESS WHEREOF, the undersigned have executed this Guaranty as of the date
first above written.
"Guarantor"
NATIONAL TELEPHONE & COMMUNICATIONS, INC.
By: /s/ DENIS RICHARD
-------------------------------------
Denis Richard
President and Chief Executive Officer
8
<PAGE> 9
AGREEMENT OF BORROWER
John P. Casey hereby agrees to indemnify National Telephone &
Communications, Inc. as set forth in Section 10.6 to the foregoing Guaranty.
/s/ JOHN P. CASEY
------------------------------------
JOHN P. CASEY
9
<PAGE> 1
EXHIBIT 4
JOHN P. CASEY
c/o Meridian
10220 River Road, Suite 115
Potomac, Maryland 20854
November 5, 1998
Dr. Robert Cohen
Ms. Stefanie Rubin
Ms. Allyson Cohen
Mr. Jeffrey Cohen
Mr. Jeffrey Rubin
Dr. Alan Cohen
Ms. Meryl Cohen
Ms. Gabrielle Cohen
Ms. Jaclyn Cohen
Ms. Erica Cohen
Ms. Nicole Cohen
Ms. Lenore Katz
Broadway Partners c/o Mr. Jeffrey Cohen
c/o Robert S. Matlin, Esq.
Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor
New York, New York 10019-4315
Ladies and Gentlemen:
This letter is to confirm that I hereby agree that I will vote all
shares of Incomnet, Inc. stock that I own in favor of an increase in the
authorized number of shares of Incomnet, Inc. common stock to 50,000,000 shares
at the next meeting of shareholders. If shareholder approval is not obtained at
the next meeting, I hereby agree to continue to vote all my shares in favor of
such a proposal until there is a sufficient increase in the
<PAGE> 2
Dr. Robert Cohen, et al.
November 5, 1998
Page 2
number of shares of authorized Incomnet common stock to permit issuance of all
common stock underlying the warrants owned by each of you and referenced in the
Settlement and Release Agreement between you and the Company dated November 5,
1998.
Very truly yours,
/s/ JOHN P. CASEY
------------------------------
John P. Casey
<PAGE> 1
EXHIBIT 5
JOHN P. CASEY
c/o Meridian
10220 River Road, Suite 115
Potomac, Maryland 20854
November 5, 1998
Ms. Ellen Cohen
Mr. Martin Fabrikant
c/o Robert S. Matlin, Esq.
Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor
New York, New York 10019-4315
Dear Ms. Cohen and Mr. Fabrikant:
This letter is to confirm that I hereby agree that I will vote all
shares of Incomnet, Inc. stock that I own in favor of an increase in the
authorized number of shares of Incomnet, Inc. common stock to 50,000,000 shares
at the next meeting of shareholders. If shareholder approval is not obtained at
the next meeting, I hereby agree to continue to vote all my shares in favor of
such a proposal until there is a sufficient increase in the number of shares of
authorized Incomnet common stock to permit issuance of all common stock
underlying the warrants owned by each of you and referenced in the Settlement
and Release Agreement between you and the Company dated November 5, 1998.
Very truly yours,
/s/ JOHN P. CASEY
-----------------------------
John P. Casey
