TERM NOTE
$8,374,610.64 December 15, 1998
FOR VALUE RECEIVED, the undersigned, Incomnet, Inc., a California
corporation whose principal offices are located at 2801 Main Street, Irvine,
California, 92614 (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 EIGHT MILLION THREE HUNDRED SEVENTY FOUR
THOUSAND SIX HUNDRED TEN AND 64/100 DOLLARS ($8,374,610.64) (the "Term Note
Principal Amount") plus all accrued and unpaid interest and fees thereon on the
Maturity Date (defined below).
All capitalized terms not otherwise defined herein shall have the meaning
given such term in the Loan and Security Agreement, dated the date hereof, among
the Borrower, the Lender and Incomnet Communications Corporation (the "Loan
Agreement").
1. PAYMENTS
(a) As set forth above, the Term Note 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 December 31, 2000.
(b) The Borrower shall pay to the Lender interest on the unpaid Term Note
Principal Amount at a per annum rate equal to twelve percent (12%). Interest
charges shall be computed on the basis of a year of 360 days and actual days
elapsed and shall be payable to the Lender quarterly in arrears on the first
Business Day of each Fiscal Quarter, with the first such payment of interest
becoming due and payable on January 1, 1999 ("First Payment"). Accrued interest
for the period from December 15, 1998 through December 31, 1998 shall be paid in
arrears along with the First Payment.
(c) If any Event of Default occurs, then, from the date such Event of
Default occurs and until it is cured, or until all Obligations are paid and
performed in full, whichever first occurs, the Borrower shall pay interest on
the unpaid Term Note Principal Amount at a per annum rate equal to three percent
(3%) plus the rate of interest otherwise specified herein as applicable to such
loan.
(d) In no event shall the interest rate and other charges hereunder exceed
the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. If a court
determines that the Lender has received interest and other charges hereunder in
excess of the highest rate applicable hereto, such excess shall be deemed to
have been received on account of, and shall automatically be applied to reduce,
the Term Note Principal Amount in the inverse order of maturity, and the
provisions hereof shall be deemed amended to provide for the highest permissible
rate. If there is no Term Note Principal Amount outstanding, the Lender shall
refund to the Borrower such excess.
(e) The Borrower may prepay the Term Note Principal Amount in whole or in
part at any time and from time to time, upon at least two (2) Business Days'
prior written notice to the
Lender. All prepayments of the principal of the Term Note Principal Amount shall
be accompanied by the payment of all accrued but unpaid interest on the prepaid
principal amount of the Term Note Principal Amount to the date of prepayment.
Any prepayment under this section of less than all of the outstanding Term Note
Principal Amount shall be applied, first, to accrued but unpaid interest on the
Term Note Principal Amount and, second, to the Term Note Principal Amount to be
prepaid.
(f) All payments of principal, interest, and other sums due to the Lender
shall be made at the following address:
Ironwood Telecom LLC
555 Zang Street, Suite 300
Lakewood, Colorado 80228
Attention: John P. Hill
or such other address or bank account as may be designated by the Lender in
writing from time to time. All such payments shall be made in immediately
available funds. If any payment of the Term Note Principal Amount, interest
thereon or other sum to be made hereunder becomes due and payable on a day other
than a Business Day, the due date of such payment shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the applicable
interest rate during such extension.
(g) This Term Note is the Term Note referred to in the Loan Agreement. All
terms and conditions set forth in the Loan Agreement are incorporated herein and
made a part hereof. The Loan Agreement is secured by certain collateral more
specifically described in the Loan Agreement.
2. EVENTS OF DEFAULT
Upon and after the occurrence of an Event of Default under the Notes or as
described in the Loan Agreement, the Lender shall have all of the rights and
remedies set forth in Section 11.2 of the Loan Agreement.
3. 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 Agreement,
including, without limitation reasonable attorneys' and paralegals' fees and
disbursements of counsel to the Lender.
4. GOVERNING LAW
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.
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5. NO RIGHT OF SET-OFF
No set-off, counterclaim, reduction or diminution of any obligation, or
any defense of any kind or nature (other than performance by the undersigned of
its obligations hereunder) which the Borrower has or may have against Lender or
any affiliate or assignee thereof shall be available hereunder to the Borrower.
6. WAIVER OF PRESENTMENT; CUMULATION OF REMEDIES
All parties to this Term Note, including the Borrower and any sureties,
endorsers or guarantors, hereby waive presentment for payment, demand, protest,
notice of dishonor, notice of acceleration of maturity, and all defenses on the
ground of extension of time for payment hereof, and agree to continue and remain
bound for the payment of principal, interest and all other sums payable
hereunder, notwithstanding any change or changes by way of release, surrender,
exchange or substitution of any security for this Term Note or by way of any
extension or extensions of time for payment of principal or interest; and all
such parties waive all and every kind of notice of such change or changes and
agree that the same may be made without notice to or consent of any of them. The
rights and remedies of the holder as provided herein shall be cumulative and
concurrent and may be pursued singularly, successively or together at the sole
discretion of the holder, and may be exercised as often as occasion therefor
shall occur, and the failure to exercise any such right or remedy shall in no
event be construed as a waiver or release of the same.
INCOMNET, INC.
By: /s/ Denis Richard
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Denis Richard
Its: President and Chief Executive Officer
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