Attachment 20170112154259-660.p

20170112154259-660.p

SUPPLEMENT

Supplement

1998-09-18

This document pretains to ITC-T/C-19980918-00650 for Transfer of Control on a International Telecommunications filing.

IBFS_ITCTC1998091800650_1392986

                                             —Tc—1(—199809/5—000650


            Categories of Services for 214 Applications
                     (Streamline/Non—streamline)
               nnnuupsmumymmmurnme—sogcedb




          ASSIGNMENT OF LICENSE
  a




          GLOBAL FACILITIES—BASED SERVICE
  8




          GLOBAL FACILITIES—BASED/GLOBAL RESALE SERVICE
  8 80




          GLOBAL RESALE SERVICE
          INDIVIDUAL FACILITIES—BASED SERVICE
          INTERCONNECTED PRIVATE LINE RESALE SERVICE
  i3




          LIMITED GLOBAL FACILITIES—BASED SERVICE/LIMITED
  9




          GLOBAL RESALE SERVICE
          LIMITED GLOBAL FACILITIES—BASED SERVICE
DD\DDDD




          LIMITED GLOBAL RESALE SERVICE
          INMARSAT AND MOBILE SATELLITE SERVICE
          SWITCHED RESALE SERVICE
          TRANSFER OF CONTROL
          SUBMARINE CABLE LANDING LICENSE
          INTERNATIONAL SPECIAL PROJECT




   Description of Application:


                                                       %




                                   BEFORE THE
                       FEDERAL COMMUNICATIONS C(                                                                                 ISSION




                                                           Nuwme! Nee‘ Noucer‘ Nee Suce? Sume! Suus! Nuws! Suu Ne Suad!
In re Application of
                                                                                                                          Strn   ied     ITC—T/C—19980918—00650
National Telephone & Communications, Inc.                                                                                 NA¥
                                                                                                                          INC    L TELEPHONE & COMMUNICATIONS,


for Authority Pursuant to Section 214of the
Communications Act of 1934, as amended
for Transfer of Control of Authorization
to Provide International Resold Communications
Services and Related Transactions




                                          APPLICATION


       National Telephone & Communications, Inc. ("NTC" |                                                                        pplicant"), pursuant to Section

214 of the Communications Act of 1934, as amended, 47 U.S                                                                        214, and Section 63.18 of the

Commission‘s Rules, 47 C.F.R. § 63.18, hereby requests aut                                                                        for the transfer (3fcontrol, as

defined under relevant Commission law and precedent, ofNTC                                                                       10n 214 authorization to reflect

the proposed acquisition Qf control of the Board of NTC‘s ¢                                                                      and ultimate corporate parent

Incomnet, inc. ("Incomnet") by Jf)hn P. Casey gnd, to the exter                                                                  ired, an accompanying change

in the structure ofIncomnet‘s Board ofDirectors (the "Transact                                                                   The proposed Transaction will

be completely transparent to NTC‘s customers, who will continue to receive the same high quality

cost—efficient services that they currently receive.

        Applicant submits the following information in support of this Application:




                                                                                                                                              COPY


1.      REQUEST FORAPPROVAL

        NTC is a privately held corporation organized under the laws ofthe State ofDelaware.

holds global Section 214 authorization to provide resold international telecommunications serv:

NTC is wholly owned by Incomnet, a publicly traded company organized under the laws ofthe

of California.    NTC is a reseller of telecommunications services, including interstate

international long distanceservices, that relies exclusively on the facilities of other carriers |

service offerings. Specifically, NTC acts as a supplier of long distance services and a mark

agent for WorldCom Network Services, Inc. ("WorldCom"), one ofthe largest interexchange ca

in the United States.

       Mr. Casey, a Senior Vice President of Meridian Investments, Inc. ("Meridian"), mait

his business offices at 10220 River Road, Suite 115, Potomac, Maryland 20854. Mr. Case

extensive experience in financial and marketing matters. Casey is also the largest sharehol«

Incomnet who, over the course of the past year has steadily increased the size of his investm:

Incomnet.    Although Mr. Casey inte_:nds to exercise general oversight of the operation:

management of NTCimmediately upon consummation of the proposed transaction, Mr. Case

not yet assumed an active role in the oversight of NTC‘sactivities. _

       NTC is currently substantially in arrears for payments for services repdered by World

as well as for payments due its principal lender, First Bank & Trust Company of Newport Beach

("First Bank"). WorldCom and First Bank have questioned the ability of NTC to meet the terms of

these outstanding liabilities and expressed reservations over the continuing viability of NTC.




U      National Telephone & Communications, Inc., ITC—95—093 (Feb. 3, 1995).

                                                 F9 s


Accordingly, Worlc’lCom and First Bank recently announced their intention to cease prqviding

service to and\to foreclose on certain of NTC‘s assets.

       In order to address the concerns raised by WorldCom and First Bank, Mr. Casey entered into

negotiations with Incomnet, WorldCom andFirst Bank. As a result of these negotiations as well

as the continuing negotiations with Incomnet, on August 21, 1998, Mr. Casey approved a non—

binding Term Sheetto the Board of Directors of Incomnet setting forth non—binding terms of a

proposal through which Mr. Casey would acquire control of the Board of Incomnet. On August 26,

1998, however, WorldCom and First Bank expressly indicated their intention to cease providing

service to NTCand foreclose on certain ofNTC‘s assets umless, among other things a Board Change

Agreement was entered into by August 28, 1998 (the “‘Boérd Change Agreement‘). The Board

Change Agreement, which is subject to various conditions, was entered into on August 28, 1998.

WorldCom and First Bank agreed to forbear until September 25, 1998, provided that, amongother

things, certain payments to those secured creditors are made by September 25, 1998, and the Board

Change Agreejment was entered into by August 28, 1998. The Board Change Agreement provides

that Mr. Casey will use commercially reasonable efforts to provide additional debt or equity

financing for the Company. Assuming that the conditions to the Board Change Agreement are

satisfied, it is expected that the Board change will occur by the end of September 1998. Due to the

extremely rapid development of the Transaction, NTC has sought Special Temporary Authority

("STA") to complete the transaction by letter filed herewith.

II.    DESIGNATED CONTACTS

       The designated contacts for correspondence and questions concerning this Application are:


                       Dale R. DeForge
                       National Telephone & Communications, Inc.
                       2801 Main Street
                       Irvine, CA 92614
                       (949) 224—7750 (Tel)
                       (949) 224—7751 (Fax)

with a copy to:

                       John P. Casey
                       10220 River Road, Suite 115
                       Potomac, MD 20854
                       (301) 983—5000 (Tel)
                       (301) 983—9012 (Fax)

and:

                       Phyllis A. Whitten
                       Edward S. Quill, Jr.
                       Swidler Berlin Shereff Friedman, LLP
                       3000 K. Street, NW, Suite 300
                       Washington, DC 20007
                       (202) 424—7500 (Tel)
                       (202) 424—7645 (Fax)

III.   PUBLIC INTEREST

       The transfer of control of NTC to Mr. Casey, through NTC‘s parent Incomnet, serves the

public interest. Applicant respectfully submits that the proposed transfer of control is necessary to

permit NTC to continue to provide service to its existing customers and to prevent a sudden

interruption in international service to NTC‘s customers.       As explained above, Mr. Casey‘s

assumption of control ofIncomnet is one ofthe explicit conditions imposed by WorldCom and First

Bank to permit NTC to continue operating.

       Although the control ofNTC will be transferred to Mr. Casey, the Transaction will not affect

the rates, terms or conditions of service or result in a change in the manner in which NTC provides


                                                — 4.


service to its international customers. NTC will continue to provide service under its own nam e and

pursuant to its own grant of Section 214 authority. In addition, NTC will be led by a team of well—

qualified telecommunications managers. As such, the Transaction has not caused inconvenienice or

confusion to NTC‘s sustoriers or othewise iaidversely impacted the operations o NTC.

        While the Triinsact on will b : tr ans paren‘ to NT‘C‘s customers with regard to the service s that

they receive, the Tiansac:ion i; a so expected to provide NTC with financial and mana zerial

resources required to perim it it to ccentiauc offering service to its customers. As explained in 1etail

above, the financial sxigencies faced ty NTU r:quire immediate resolution.

IV.     INFORMA‘[ION RIQUL ED UNDHR SECTION 63.18

       The following info mition is subriitted, as required by Section 63.18 of the Commission‘s
Rules, 47 C.F.R. §6:).13, i1 s ipport of Applicaint‘s request for authorization.

        (a)     Names, adcresse:; ar d phone nuinbers of Applicant:

                Naticna! Telephcne & To: n unications, Inc.
                2801 Miin St1eel
                Irvine, CA 92614
                (949) 224—750 (Tel)
                (949) 224—,751 (Fa:)

        (b)      NTC is a corpor: tio 1 o0 ganized under the laws of the State of Deaware. Incomnet
                is a public}, traded «corporation organized under the laws of the S :ate of California.
                Mr. Casey s ;. U.S. cit ze 1 resic ing in Potomac, Maryland. Mr. Casey, Incomnet,
                and the Board »flJircctors of: ncomnet, NTC‘s direct and ultimate corporate parent,
                have entered into an agreeinent, which is subject to satisfaction or waiver of various
                conditions, through which Mr. Casey is expected to acquire control of the Board of
                Incomnet by the end of September 1998, provided that certain conditions are met.
                As a result of the Transaction, the directors and officers of Incomnet and NTC will
                undergo substantial changes in composition. A list of the current officers and
                directors of Incomnet and NTC are included at Exhibit A.

        (c)     Correspondence concerning this application should be sent to:


                    Dale R. DeForge
                    National Telephone and Communications, Inc.
                    2801 Main Street
                    Irvine, CA 92614
                    (949) 224—7750 (Tel)
                    (949) 2224—7751 (Fax)

             with a copy to:

                    John P. Casey
                    10220 River Road, Suite 115
                    Potomac, MD 20854
                    (301) 983—5000(Tel)
                    (301) 983—9012 (Fax)

and:

                    Phyllis A. Whitten
                    Edward S. Quill, Jr.
                    Swidler Berlin Shereff Friedman, LLP
                    3000 K Street, NW, Suite 3000 _
                    Washington, DC 20007
                    (202) 424—7500 (Tel)
                    (202) 424—7645 (Fax)

       (d)   NTC holds Section 214 authority, granted by the Commission on February 3, 1995,
             to operate as a global international resale carrier of switched telecommunications
             services. See FCC File No. ITC—95—093. Neither Incomnet nor Mr. Casey holds
             Section 214 authority.

       (e)   Mr. Casey and NTC‘s corporate parent (Incomnet) have executed and consummated
             an agreement through which Mr. Casey, subject to various conditions, will acquire
             control of the Board of Incomnet and therefore of NTC.

       (£)   Not applicable.

       (g)   Not applicable.

       (h)   Neither Mr. Casey nor NTC are affiliated with any carrier that holds market power
             in a foreign destination market.

             NTC is a wholly owned subsidiary of Incomnet. The following entities hold a ten
             percent (10%) or greater ownership or management interest in Incomnet:

                                            —6—


Name/Adidre is                     .¥o|Teld             ~df                    icipal Business

John P. Cuse /;                    30.7%2              | Jf                    ividual
10220 River Road                                   .
Suite 1 1 5
Potomic, M 20854

Cohen Srou;                        208 64              198                     [viduals
1500 Hemw ps ead T urr pil:e
East M sacov, NY 11 35«

        Follo virg the completicn of the prop                   d tra isa      m, no NTC directors wil hold
interloc king positicns wi h any 0 her telec xm nu              ations pr      deis.

        (i)       4 pprlic int certiies that its 1 as no        reed ind       11 not agree in the future to rccept
                  aary diisci or irdirsct spzcial con           sions fro      i foreign carrier or admi aistration
                  vitk re gaids to tra ‘fic or re renue         ws be tw       th: United States znd any foreign
                  countriss ‘he ccmjpany is at thoriz           to serve.




¥       Mi. C asey cur :er tly hclds an optio 1 (the            »he n Opt      ") 10 purchase Series 1\ a id series
B Convertible Preferred ; itock wt ich is :ot ve‘tit            nto ec m1      istock. If Incomnet hiid s ufficient
authorizec¢ buit unissu:d :sommor stock: tc effec               coiiversi      of these preferred sh:ire:; and the
other pref:rr:d shure ; tiat were tenderec for c                ‘ersi0. 1 11   ine 1998, Mr. Casey would own
approximitely 47 per:ert of the shires 0 the c                  tardit g |     im>n stock of Incomumet. At this
time, how »ver, ncom ne does no : have su ‘ficier               m non s        ¢ a ithorized to permit ccnversion
of Incomn:t‘: preferred stock. Aia tern(fthe:                   rd Chan;       \greement referred to ab ove , Mr.
Casey is obli sat:d :o iss gn the C oh :n Op :i011 t«           commnt 1       »r certain conditions ind , if those
conditions are rot met, ‘he comino: sioc t issu                 : pirsual      > tie conversion of the pre:‘erred
stock that is subje:t :o he Cohin Dp:ion vill                  a >ro rata basis to all Incomnet
                                                                 offer »d
shareholders at :i p ic re presenti ig no act 1al pr to M :. ( 3y. If Incomnet is no: firancially
capable of redeeming the Cohen Preferred Stock on or before October 14, 1998, Mr. Casey will
exercise the option and acquire the underlying Cohen Preferred Stock.
3/
       The Cohen Group, comprised of twelve individual investors, holds Series A and Series B
Convertible Preferred Stock, which if converted into common stock would total approximately
28 percent of the common stock of Incomnet. As noted above, Incomnet does not at this time
have sufficient common stock authorized to permit the conversion of preferred shares into
common stock. Also as cited above, Mr. Casey holds an option to purchase all of the preferred
stock held by the Cohen Group. The Cohen Group also holds options to purchase an additional
1.5 percent of Incomnet. These options are not part of the Cohen Option.

                                                         — 4.


           (J)    Applicant certifies that no party to this application has been denied federal benefits
                  pursuant to Section 5301 of the Anti—Drug Abuse Act of 1988. Applicant‘s
                  certification is attached.



v.         CONCLUSION

           For the reasons stated herein, Applicant respectfully submit that grant of this application

serves the public interest. Applicant therefore respectfully request that the Commission grant

approval to permit Mr. Casey to acquire control of NTC as set forth above.




                                                    Jol
                                                 Respectfully submitted,




                                                 Dale R. DeForge          (
                                                 National Telephone & Cominunications, Inc.
                                                 2801 Main Street
                                                 Irvine, CA 92614
                                                 (949) 224—7750 (Tel) >
                                                 (949) 224—7751 (Fax)


Dated: September 17,1998




249779.1


                                            EXHIBITS

List of officers and directors of Incomnet, Inc.
and National Telephone & Communications, Inc. .................................... A

CERTIFICATION


                                          EXHIBIT A


Current Officers and Directors of Incomnet, Inc.

Melvyn Reznick, President and Director
Mark J. Richardson, Secretary
Howard Silverman, Director
David Wilstein, Director
Nancy S. Zivitz, Director
Richard M. Horowitz, Director
Rolf Lesem, Director



Current Officers and Directors of National Telephone & Communications, Inc.

Michael J. Keebaugh, Executive Vice President
Debra A. Chuckas, Senior Vice President
Timothy M. Ciaccio, Vice President
Gerald A. DeCiccio, Vice President
Dale R. DeForge, Secretary
James R. Quandt, Director
Michael L. Tenzer, Director
Fred G. Jager, Director
Pamela Fanning Carter, Director


                              CERTIFICATION OF APPLICANT


        On behalf of National Telephone & Communications, Inc., and in accordance: w hi sct on
1.2001—1.2003 ofthe Commission‘s Rules, 47 C.F.R. §§ 1.2001—1.2003, I hereby certify th itn )p:; ty
to this application is subject to a denial of Federal benefits that includes FCC benefits j irs an to
Section 5301 of the Anti—Drug Abuse Act of 1988. See 21 U.S.C. § 853a.I also here‘y ert ‘y 1 at
the statements in the foregoing request for Special Temporary Authority are true, con ple s, : ad
correct to the best of my knowledge and are made in good faith.


       National Telephone & Communications, Inc. has not agreed to ar y concessions lir: :th or
indirectly from any foreign carrier or administration with respect to traffic ind revenue fic vb tw en
the United States and various international points under the authority graiited under Sec on 1« of
the Communications Act of 1934, as ariended, and the Commission‘s Riles, and has nc ag ce« to
enter into such agreements in the future.



                               National Telephone & Communications , Inc.




                               By:
                                Y                —{      \—/      >


                               Name:           Michael J. Keebaugh


                               Title:    _     COO0 and EVP


                               Date:            September 15, 1998



Document Created: 2019-04-20 14:47:54
Document Modified: 2019-04-20 14:47:54

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