SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 29, 1998
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Incomnet, Inc.
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(Exact Name of Registrant as Specified in its Charter)
California 0-12386 95-2871296
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2801 Main Street, Irvine, California 92614
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (949) 251-8000
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20501 Ventura Boulevard, Suite 265, Woodland Hills, California 91364
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(Former Name or Former Address, if Changed Since Last Report)
Item 1. Change in Control of Registrant.
CHANGE IN COMPOSITION OF BOARD. Incomnet, Inc. (the "Registrant" or the
"Company") previously entered into the Board Change Agreement dated August
28, 1998 (the "Board Change Agreement"), with the then current directors of
the Company and John P. Casey, the Company's single largest shareholder. The
summary of the terms of the Board Change Agreement set forth below is
qualified by, and should be read in conjunction with, the Board Change
Agreement in its entirety, a copy of which was included as an exhibit to the
Company's Current Report on Form 8-K dated August 28, 1998 filed with the
Securities and Exchange Commission ("SEC") and is incorporated by reference
into this Current Report. On September 29, 1998, in accordance with the Board
Change Agreement, Messrs. Melvyn H. Reznick, Rolf Lesem, Richard M. Horowitz
and David Wilstein and Ms. Nancy S. Zivitz resigned as directors of the
Company as well as from any other office they may have then held, and Dr.
Howard Silverman continued to serve as a member of the Board of Directors.
In addition, on September 29, 1998 and in accordance with the Board Change
Agreement, Mr. Casey and two of Mr. Casey's designees, John Hill, Jr. and
Michael A. Stein, were appointed as directors of the Company (the change in
the composition of the Board of Directors in accordance with the Board Change
Agreement is sometimes referred to in this Current Report as the "Board
Change"). Further, on September 29, 1998, Mr. Casey was appointed Chairman
of the Board of Directors. The Company has entered into an employment
agreement with Mr. Casey relating to his duties as Chairman. See "Item 5.
Other Events -- Casey Services Agreement."
On October 2, 1998, the Board of Directors appointed Mr. Denis Richard and
Mr. Scott Eisenberg as directors of the Company, filling two of three vacant
positions on the seven-member Board of Directors. Mr. Richard was also
appointed President and Chief Executive Officer of the Company and its
subsidiary, National Telephone & Communications, Inc. ("NTC"). The Company has
entered into an employment agreement with Mr. Richard relating to his duties as
President and Chief Executive Officer of the Company and NTC. See "Item 5 Other
Events -- Richard Employment Agreement." Thus, following the appointment of
these two directors on October 2, 1998, the Company's Board of Directors
consisted of Messrs. Casey (Chairman), Eisenberg, Hill, Richard and Stein and
Dr. Silverman.
A description of the business experience of the current directors of the
Company is set forth below.
JOHN P. CASEY, 49, has been a director and Chairman of the Board of the
Company and since September 29, 1998 and a director of NTC since October 1,
1998. Mr. Casey also is the Senior Vice President, Financial Marketing for
Meridian Investments, Inc., an NASD registered broker-dealer ("Meridian"), since
1981. Meridian is a privately held company and Mr. Casey believes that it is
one of the largest originators of tax credit equity in the United States.
Mr. Casey is primarily responsible for the design of financial marketing plans
for Meridian. Since 1996, Mr. Casey has served as a director of Val-u-net and
since 1997 he has served as a director of 1-800-Database, which are privately
held companies involved in electronic commerce and internet technologies.
Mr. Casey also currently serves as a director of the Make-a-Wish Foundation for
the
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Mid-Atlantic region. Mr. Casey received a Bachelor of Science degree in
Political Science in 1971 from the University of Massachusetts (Boston State
College).
SCOTT EISENBERG, 39, has been a director of the Company since October 2,
1998. Since June 1996, Mr. Eisenberg has been the Director, Product Management
for CyberCash, a leading provider of payment solutions for internet and
real-world storefronts. From March 1993 until he joined CyberCash in June 1996,
Mr. Eisenberg had key management positions with MCI Telecommunications in its
internet services sector and long distance telephony services sector. From 1989
to 1993, Mr. Eisenberg was a partner in an investment banking firm where he
advised emerging growth companies in connection with equity and debt financings
and mergers and acquisitions. Mr. Eisenberg received a Bachelor of Science
Degree in Engineering, summa cum laude, from the University of Pennsylvania in
1981, a Bachelor of Science Degree in Economics, summa cum laude, from the
Wharton School of the University of Pennsylvania in 1981, and a Masters in
Business Administration (MBA) degree, with distinction, from the Harvard
Business School of Harvard University in 1986.
JOHN P. HILL, JR., 38, has been a director of the Company since September
29, 1998 and a director of NTC since October 1, 1998. Mr. Hill is the President
of Quince Associates, a closely held company with investments in real estate,
retail convenience stores, restaurants, technology and various other public and
private companies. Since 1989, he has also served as President of Trans Pacific
Stores, Ltd., a privately held operator of retail stores. Since 1997, Mr. Hill
has served as a director of Covol Technologies, Inc., a publicly traded
technology development company based in Utah. Prior to 1989, Mr. Hill was the
Chief Financial Officer for various privately held retail and restaurant
companies. Mr. Hill received a Bachelor of Science degree in Accounting from
the University of Maryland and became a certified public accountant in 1984.
DENIS RICHARD, 38, has been the President and Chief Executive Officer of
the Company and NTC since September 29, 1998, a director of NTC since October 1,
1998 and a director of the Company since October 2, 1998. From 1995 to
September 1998, Mr. Richard held management positions at Teleglobe Inc. and its
subsidiary, Teleglobe International Corp. Teleglobe is one of the world's
largest intercontinental telecommunications companies. In 1996, Mr. Richard was
appointed Vice President, Law & Corporate Affairs for Teleglobe International
Corp. Prior to this appointment, he served as Director of Special Projects for
Teleglobe Inc. From 1989 until he joined Teleglobe in 1995, Mr. Richard was
Senior Counsel with BCE Inc., where he was involved in many of that company's
telecommunications investment activities, as well as heading several other
divestiture and reorganization projects. Mr. Richard received Bachelor of Law
and Bachelor of Communication and Science degrees from the University of Moncton
in New Brunswick.
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DR. HOWARD SILVERMAN, 57, has been a director of the Company since
January 1997. He is presently an independent consultant in the investment
banking industry. From November 1996 to October 1997, he served as an
investment banking consultant with Andrew, Alexander, Wise & Co. From May 1995
to November 1996, Dr. Silverman served as Vice President of Corporate Finance
for Rickel & Associates. From 1991 until he joined Rickel, he served as an
independent consultant to development stage and middle market companies. From
1985 to 1991, he was the founder and Chairman of the Board of Vision Sciences, a
company that developed, manufactured and marketed in-office lens casting
systems. In 1968, Dr. Silverman received a Doctor of Optometry from Illinois
College of Optometry and in 1965, he received a Chemical Engineering degree from
the College of the City of New York.
MICHAEL A. STEIN, 49, has been a director of the Company since September
29, 1998. In October 1998, Mr. Stein became the Executive Vice President and
Chief Financial Officer of Nordstrom, Inc., a fashion specialty retailer with 97
stores located in 22 states. At Nordstrom, Mr. Stein is responsible for all of
Nordstrom's financial operations and strategic planning. From 1993 through
September 1998, Mr. Stein was the Executive Vice President and Chief Financial
Officer of Marriott International, Inc. At Marriott, Mr. Stein was responsible
for Marriott's treasury, corporate and project finance, investor relations,
controllership, tax, risk management and internal audit functions. Mr. Stein
joined Marriott in 1989 as its Vice President, Finance and Chief Accounting
Officer. Prior to joining Marriott, Mr. Stein spent 18 years with Arthur
Andersen LLP where he was a partner. Mr. Stein graduated from the University of
Maryland and is a certified public accountant.
As more fully described in Mr. Casey's Schedule 13-D filed on April 7,
1998, as amended, Mr. Casey beneficially owns 6,137,504 shares of the
Company's Common Stock (approximately 30% of the outstanding shares of Common
Stock) and has an option to purchase 1,598.2 shares of the Company's
Preferred Stock from certain persons (the "Cohen Group") who filed a Schedule
13-D with the SEC on June 19, 1998 as a group (as amended, the "Cohen 13-D").
Under the Board Change Agreement, Mr. Casey has certain obligations to
assign or transfer to the Company the Cohen Option or shares of Preferred
Stock underlying the Cohen Option (the "Cohen Preferred Stock"). See "--
Other Terms of Board Change Agreement." Mr. Casey purchased 1,907,404 shares
of Common Stock using a credit facility ("Casey Credit Facility") provided by
Trans Pacific Stores, Ltd., a Hawaiian corporation. The Casey Credit
Facility is secured by a pledge of certain personal assets of Mr. Casey not
including any shares of the Company's Common Stock owned by Mr. Casey. The
Casey Credit Facility bears a simple interest rate of 18% per annum and has
no minimum periodic payments and no prepayment penalties. The Casey Credit
Facility is due and payable in full with accrued interest by no later than
June 30, 1999, unless extended by mutual agreement. As described above, a
director of the Company, John Hill, is President of Trans Pacific Stores, Ltd.
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Based on the percentage of his stock ownership and since Mr. Casey was
appointed a director and Chairman of the Board and designated two other members
to the Company's Board of Directors pursuant to the Board Change Agreement, Mr.
Casey may be deemed to have acquired control over the Company (as control is
defined under the Securities Exchange Act of 1934, as amended) following
completion of the Board Change Agreement on September 29, 1998.
OTHER TERMS OF BOARD CHANGE AGREEMENT. In addition to the change in the
composition of the Board of Directors, the Board Change Agreement obligates the
Company, subject to applicable law, to nominate Dr. Silverman for reelection to
the Board of Directors at the next annual meeting of the Company's shareholders.
Further, the Board Change Agreement obligates the Company to form and appoint
members to an Audit Committee, a Compensation Committee and a Disinterested
Director Committee and offer Mr. Silverman the opportunity to be a member on
those committees. Also, if the Company forms an Executive Committee, the
Company must offer Dr. Silverman the opportunity to become a member of that
committee.
Under the Board Change Agreement, Mr. Casey is obligated to assign the
Cohen Option to the Company if (i) the Company is financially able to purchase
or redeem the Cohen Preferred Stock at the exercise price set forth in the
agreement among Mr. Casey and the Cohen Group (the "Cohen Option Agreement")
prior to termination of the Cohen Option, (ii) the Cohen Group consents to the
assignment, (iii) the Company agrees to exercise the Cohen Option and redeem the
Cohen Preferred Stock prior to termination of the Cohen Option and (iv) the
Company agrees to reimburse Mr. Casey for costs and expenses associated with
acquiring and assigning the Cohen Option (including the Cohen Option price and
Mr. Casey's closing costs and reasonable legal fees relating thereto). The
Cohen Option initially was scheduled to terminate on October 14, 1998 but has
been extended by agreement between Mr. Casey and the Cohen Group and will
terminate on November 5, 1998 (the "Cohen Option Termination Date").
Under the Board Change Agreement, if the Company is not financially able to
redeem the Cohen Preferred Stock on or before the Cohen Option Termination Date,
then Mr. Casey is obligated under the Board Change Agreement to exercise the
option and acquire the underlying Cohen Preferred Stock. For the one-year
period after the exercise of the Cohen Option by Mr. Casey, the Company will
have the right to redeem the Cohen Preferred Stock at a redemption price equal
to Mr. Casey's purchase price plus carrying costs, and Mr. Casey will be
obligated to hold the Cohen Preferred Stock (without transferring or converting
it) during that one-year period.
If the Company is not financially able to redeem the Cohen Preferred Stock
from Mr. Casey during such one-year period, then Mr. Casey is obligated under
the Board Change Agreement to tender the Cohen Preferred Stock to the Company
for conversion at the end of such one-year period and the Company will convert
the Cohen Preferred Stock into Common Stock (the "Cohen Common") at a conversion
price which approximates
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the conversion price per share when the Cohen Preferred Stock was tendered for
conversion by the Cohen Group on June 10 and 11, 1998 (i.e., approximately $0.19
per share of Common Stock). In such an event, Mr. Casey has agreed to register
and offer the Cohen Common to all of the Company's shareholders on a pro rata
basis for a purchase price equal to the sum of (i) the conversion price paid by
Mr. Casey (i.e., approximately $0.28 per share), (ii) Mr. Casey's carrying costs
and reasonable legal fees and costs attributable to the purchase of the Cohen
Preferred Stock and the offering of the Cohen Common. To the extent that the
Cohen Common is not fully subscribed in the first offering, Mr. Casey has agreed
to offer the remaining Cohen Common to the subscribing shareholders on a pro
rata basis in a second round, after which any remaining Cohen Common could be
retained by Mr. Casey or assigned by him in his sole discretion.
Under the Board Change Agreement, the Company has agreed to solicit the
approval of the Company's shareholders to the proposed amendment to the
Company's Articles of Incorporation, as amended, to increase the number of
authorized shares of the Company's Common Stock to 50 million. Mr. Casey has
agreed to vote in favor of such amendment at any shareholders' meeting duly
called for that purpose.
The Company is obligated under the Board Change Agreement to reimburse
Mr. Casey for any reasonable costs and expenses (including reasonable attorneys'
fees and costs), in addition to the expense reimbursements already described,
which are incurred by him in connection with: (i) the settlement of the class
action lawsuit known as Saundra Gayles vs. Incomnet, Inc. and Sam D. Schwartz,
(ii) filings made with the Securities and Exchange Commission or any other
regulatory agency in connection with the Board Change, (iii) preparation of the
information statement delivered to the Company's shareholders in connection with
the Board Change, (iv) obtaining directors' and officers' insurance coverage,
(v) negotiating and preparing the term sheet relating to the Board Change and
the Board Change Agreement, (vi) any negotiations with WorldCom or First Bank
with respect to NTC, and (vii) any negotiations by Mr. Casey with institutional
investors relating to additional equity or debt financing for the Company or
NTC.
Other than the costs and expenses relating to the Cohen Preferred Stock and
those matters described in clauses (i) through (vii) above, (a) upon the
approval of a majority of the Disinterested Director Committee (and without
requiring the approval of the Company's shareholders), the Company will
reimburse Mr. Casey up to $100,000 of costs and expenses incurred by him on or
after April 1, 1998 in connection with due diligence concerning the Company and
its proposal to sell NTC, the attempt to prevent such sale and any related
documentation and his evaluation of his rights and alternatives as a significant
shareholder of the Company (collectively, the "Due Diligence and Other Costs"),
and (b) upon the approval of the majority of the Disinterested Director
Committee and the Company's disinterested shareholders, the Company will
reimburse Mr. Casey for Due Diligence and Other Costs in excess of $100,000.
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Under the Board Change Agreement, the parties released each other and
certain of their respective affiliates from Claims (as specifically defined in
the Board Change Agreement) which may arise from (i) the Board Change, (ii) the
proposed sale or recapitalization of NTC originally contemplated in or about
December 1997, including pursuant to the Asset Purchase Agreement dated as of
March 31, 1998 between NTC Acquisition, Inc. and NTC, (iii) the proposed NTC
debt financing with a financial institution in July 1998, (iv) the sale of up to
2.5 million shares of Rapid Cast, Inc. ("RCI") at $.60 per share, (v) upon the
redemption of the Cohen Preferred Stock or the approval by the Company's
shareholders of the amendment to the Company's Articles of Incorporation, as
amended, increasing the authorized number of shares of the Company's Common
Stock to 50 million shares and subsequent conversion of the Cohen Preferred
Stock into shares of Common Stock based on the conversion price when tendered
for conversion on June 10 and 11, 1998, the failure to have shares of Common
Stock available for issuance to the holders of the Cohen Preferred Stock upon
their attempted conversion of such stock into shares of Common Stock on June 10
and 11, 1998 or (vi) any action, failure to act, representation, event,
transaction, occurrence or other subject matter resulting from, arising out of,
relating to, connected in any way with, or alleged, suggested or mentioned in
connection with the foregoing matters. The parties have also agreed to
indemnify each other generally for any losses they may incur as a result of the
assertion of any released Claims against them.
Item 5. Other Events.
RICHARD EMPLOYMENT AGREEMENT. The Company and NTC entered into an
employment agreement with Mr. Richard as of September 29, 1998 (the "Richard
Employment Agreement"), pursuant to which Mr. Richard agreed to serve as the
President and Chief Executive Officer of the Company and NTC. The following
summary of the terms of the Richard Employment Agreement is qualified by, and
should be read in conjunction with, the Richard Employment Agreement in its
entirety, a copy of which is attached to this Current Report as an exhibit and
incorporated herein by reference.
The term of the Richard Employment agreement commenced on September 29,
1998 and terminates on December 31, 2001. During the term of the agreement, the
Richard Employment Agreement obligates the Company and NTC to nominate Mr.
Richard as a director of the Company and NTC (and Chairman of the Board of NTC),
if Mr. Richard so requests. Mr. Richard was appointed a director of NTC (and
its Chairman) on October 1, 1998 and a director of the Company on October 2,
1998.
Mr. Richard will receive an annual base salary of no less than $325,000.
In addition, Mr. Richard is entitled to receive a one-time signing bonus of
$353,000. If Mr. Richard terminates his employment voluntarily without "Good
Reason" (as defined in the
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Richard Employment Agreement), he must return a prorated portion of his signing
bonus. He is also eligible to participate in any executive bonus plan of the
Company and may receive up to 100% of his then current base salary as a bonus,
as determined by the Company's Board of Directors, provided, however, that Mr.
Richard is entitled to a minimum guaranteed bonus for fiscal 1999 and 2000 equal
to 50% of his then current base salary. Mr. Richard is also entitled to certain
fringe benefits under the Richard Employment Agreement, including a car
allowance, a temporary housing allowance, broker and closing
costs on sale and purchase of his residence and moving expenses.
Under the Richard Employment Agreement, the Company has agreed to issue to
Mr. Richard 13 shares of the Company's Series D Preferred Stock (inadvertently
referred to as Series C Preferred Stock in the Richard Employment Agreement).
The Series D Preferred Stock will be convertible into an aggregate of 1,300,000
shares of the Company's Common Stock at such time as the Company's Articles of
Incorporation have been amended to increase the authorized number of shares of
the Company's Common Stock to permit such conversion. The issuance to Mr.
Richard of the Series D Preferred Stock is subject (i) to the completion of a
Certificate of Determination that establishes the rights, preferences,
privileges and restrictions of such Series D Preferred Stock and (ii) the filing
of the Certificate of Determination with the Office of the California Secretary
of State. The 13 shares of Series D Preferred Stock will be entitled to vote
with the holders of the Company's Common Stock on all matters submitted to
shareholders on an as-converted-to-Common basis (i.e., the right vote as if the
shares of Series D Preferred Stock were converted into 1.3 million shares of
Common Stock). Mr. Richard has certain rights to require the Company to
register the Common Stock under the Securities Act of 1933, as amended,
following the first anniversary of the commencement of his employment with the
Company.
Under the Richard Employment Agreement, the shares of Series D Preferred
Stock and the shares of the Company's Common Stock that would be issued upon
conversion of the Series D Preferred Stock are subject to (i) a thirty-day right
of first refusal in favor of the Company (the "Company Repurchase Right") if Mr.
Richard at any time desires to sell, transfer or assign any of such securities;
and (ii) a right in favor of the Company to repurchase all, but not less than
all, of such securities if Mr. Richard terminates voluntarily without Good
Reason or is terminated by the Company for "Cause" (as defined in the Richard
Employment Agreement) prior to the first anniversary of the Employment Agreement
(the "Company Repurchase Option"). The purchase price for the securities
purchased by the Company under the Company Repurchase Right or under the Company
Repurchase Option will be the then current per share market price of the
Company's Common Stock reduced by $2.1775 (calculated on an as converted to
Common Stock basis, if the securities being transferred are Series D Preferred
Stock). The grant of the Series D Preferred Stock by the Company to Mr. Richard
is deemed to be compensation from the Company to Mr. Richard and no
consideration will be paid by Mr.
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Richard either for the issuance of the Series D Preferred Stock or upon the
conversion of the Series D Preferred Stock into shares of Common Stock.
Under the Richard Employment Agreement, the Company is obligated to pay Mr.
Richard severance if Mr. Richard terminates for Good Reason or is terminated by
the Company without Cause, as follows: (i) continued payment of base salary for
18 months or, if longer, until December 31, 2001, and (ii) reimbursement of
health insurance premiums for 18 months or, if earlier, until December 31, 2001.
The Company is also obligated to indemnify Mr. Richard against certain
liabilities relating to his service to the Company and NTC and provide coverage
for Mr. Richard under commercially reasonable directors and officers liability
insurance during the term of his employment and for three years thereafter.
If Mr. Richard is terminated for Cause or the voluntary terminates his
employment without Good Reason, Mr. Richard is prohibited under the Richard
Employment Agreement from competing (as described in the agreement) against the
Company or NTC and from soliciting employees of the Company and NTC, both for a
period 18 months following employment termination.
CASEY SERVICES AGREEMENT. On September 29, 1998, Mr. Casey and the
Company entered into an agreement (the "Casey Services Agreement"), under
which Mr. Casey agreed to perform certain duties as the Chairman of the Board
of Directors of the Company. The following summary of the terms of the Casey
Services Agreement is qualified by, and should be read in conjunction with,
the Casey Services Agreement in its entirety, a copy of which is attached to
this Current Report as an exhibit and is incorporated herein by reference.
The term of the Casey Services Agreement is three years ending on September
29, 2001, provided, however, that the agreement does not obligate Mr. Casey
to remain as Chairman of the Board nor does it obligate the Company to retain
Mr. Casey as Chairman of the Board.
Under the Casey Services Agreement, for so long as Mr. Casey acts as
Chairman of the Board, Mr. Casey will be entitled to a quarterly service fee
based on the fair market value of the Company's Common Stock at the end of each
fiscal quarter during the term of the agreement. Under the Casey Services
Agreement, fair market value of the Company's Common Stock is generally equal to
the average closing price of the Common Stock for the last five trading days
during the applicable fiscal quarter. If the fair market value of the Common
Stock is less than $4 per share at the end of each fiscal quarter during the
term of the agreement, Mr. Casey will be entitled to a service fee of $1 for
that quarter. If the fair market value of the Common Stock is $4 or more at the
end of a calendar quarter, Mr. Casey will be entitled to a service fee equal to
the product of (A) $25,000 and (B) the number determined by dividing the fair
market value of Common Stock by four. Generally, this will result in a $25,000
quarterly service fee to Mr. Casey if the market price of the Common Stock is
$4, and an additional $25,000 for each additional $4 increase in the market
price of the Common Stock.
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The maximum fee Mr. Casey would be entitled to in any fiscal quarter is
$250,000. If Mr. Casey resigns or is not elected or otherwise retained by the
Company as Chairman of the Board during the term of the Casey Services
Agreement, he will not be entitled to any quarterly services fee after such
resignation or termination of services. Under the Casey Services Agreement, Mr.
Casey has waived any right to receive retainer fees, meeting fees or other
remuneration given to other directors of the Company.
Mr. Casey has certain rights under the Casey Services Agreement to be
indemnified from claims against him arising out of his service to the Company as
Chairman of the Board.
DIRECTOR STOCK OPTION GRANTS. On September 29, 1998, the Board of
Directors granted an option to purchase 10 shares of the Company's Preferred
Stock to each non-employee director of the Company then in office (i.e., options
were granted to Mr. Hill, Dr. Silverman and Mr. Stein). On October 2, 1998, the
Board of Directors granted an option to purchase 10 shares of the Company's
Preferred Stock to Mr. Eisenberg upon his appointment to the Board of Directors
(the options granted to Messrs. Hill, Eisenberg and Stein and Dr. Silverman are
referred to in this Current Report as the "Nonemployee Director Options"). No
options were granted to either Mr. Casey or Mr. Richard.
The Nonemployee Director Options have a term of ten years and vest as
follows: (i) four shares of Preferred Stock are immediately exerciseable (upon
the filing of a Certificate of Determination with the California Secretary of
State establishing the rights, preferences and privileges thereto); (ii) three
shares of Preferred Stock vest on the first anniversary of the date of grant;
and (iii) three shares of Preferred Stock vest on the second anniversary of the
date of grant. Each share of Preferred Stock will be convertible into 10,000
shares of the Company's Common Stock. Since all of the Company's authorized
Common Stock is currently issued and outstanding, the right to convert the
Preferred Stock into Common Stock is subject to the approval by the Company's
shareholders of an amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of Common Stock available for issuance.
For Mr. Hill, Dr. Silverman and Mr. Stein, the exercise price of each
share of Preferred Stock is $20,000 which represents $2.00 per share of the
underlying Common Stock into which such Preferred Stock will be convertible.
The closing price per share of the Company's Common Stock as reported by the
Nasdaq Stock Market on the date these options were granted to Mr. Hill, Dr.
Silverman and Mr. Stein (September 29, 1998) was $2.00 (i.e., these options
were granted at 100% of the market price of the underlying Common Stock at
the date of grant). For Mr. Eisenberg, the exercise price of each share of
Preferred Stock is $22,500 which represents $2.25 per share of the underlying
Common Stock into which such Preferred Stock will be convertible. The closing
price per share of the Company's Common Stock as reported by the Nasdaq Stock
Market on the date these options were granted to Mr. Eisenberg (October 2,
1998) was $2.25 (i.e., these
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options were granted at 100% of the market price of the underlying Common Stock
at the date of grant).
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
Exhibits.
10.1 Board Change Agreement dated as of August 28,
1998, among Incomnet, Inc., Richard Horowitz,
Rolf Lesem, Melvyn Reznick, Howard Silverman,
David Wilstein, Nancy Zivitz and John P. Casey
(previously filed with the SEC as an exhibit to
Registrant's Current Report on Form 8-K dated
August 28, 1998 and incorporated herein by
reference).
10.2 Employment Agreement dated as of September
29, 1998, among Incomnet, Inc., National
Telephone & Communications, Inc. and Denis
Richard.
10.3 Letter Agreement dated September 29, 1998,
between Incomnet, Inc. and John P. Casey
relating to Mr. Casey's services as Chairman
of the Board of Incomnet, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
October 13, 1998 INCOMNET, INC.
By /s/ DENIS RICHARD
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Denis Richard
President and Chief Executive Officer
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