AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
May 6, 1998
COMMISSION NO. 0-24256
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
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REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ENHANCED SERVICES COMPANY, INC.
(Exact name of registrant as specified in its charter)
COLORADO
(State of other jurisdiction of incorporation or organization)
84-1075908
(I.R.S. Employer Identification Number)
16000 BARKERS POINT LANE
HOUSTON, TEXAS 77079
(Address of Principal Executive Offices)
CONSULTING AND WARRANT COMPENSATION AGREEMENTS AND ARRANGEMENT
FOR
KENNEDY MILES & ASSOCIATES, LTD.
AND
RICHARD FISHER
(Full title of the Plan)
------------
ROBERT SMITH
ENHANCED SERVICES COMPANY, INC.
16000 BARKERS POINT LANE
HOUSTON, TEXAS 77079
(Name and address of agent for service)
Telephone number, including area code of agent for service:
(713) 556-5051
------------
Copy to:
Justin Walker, ESQ.
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Justin Walker, ESQ. Assoiate General Council
16000 Barkers Point Lane
Houston, Texas 77079
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
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CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES TO TO BE PRICE PER OFFERING REGISTRATION
BE REGISTERED REGISTERED SHARE (1) PRICE (1) FEE
- ------------- ---------- --------- --------- ------------
Common Stock,
$.001 par value 75,000(2) $2.00(3) $150,000 $44.25(4)
50,000(2) $4.00(3) $200,000(4) $59.00(4)
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
(2) Reflects shares of common stock issuable upon exercise of the Company's
Common Stock Purchase Warrants issued to Kennedy Miles and Richard Fisher
Consulting Agreements ("Warrants").
(3) Based on average exercise price of the Warrants.
(4) Based on cumulative exercise price
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PROSPECTUS
ENHANCED SERVICES COMPANY, INC.
125,000 Shares of Common Stock
($.001 Par Value)
TO BE ISSUED TO
KENNEDY MILES & ASSOCIATES, LTD.
AND RICHARD FISHER
CONSULTING AGREEMENTS AND ARRANGEMENT
This Prospectus is part of a Registration Statement which registers an
aggregate 125,000 Shares of Common Stock, $.001 par value ("Common Stock") of
Enhanced Services Company, Inc. (the "Company") which may be issued, as set
forth herein, to Kennedy Miles & Associates, Ltd. ("KM"), and Richard Fisher
("RF") pursuant to common stock purchase warrants ("Warrants") to purchase up to
125,000 Shares of the Common Stock of the Company. Of the Warrants, 75,000 were
granted to KM pursuant to the Kennedy Miles Consulting Agreement (the "KM
Agreement") and 50,000 was granted to RF pursuant to the Richard Fisher
Consulting Agreement ("RF Agreement"). The Company has been advised by RF and KM
that they may sell all or a portion of their respective shares of Common Stock
from time to time as follows: (a) block trades in which the brokers or dealers
so engaged will attempt to sell shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) in privately
negotiated transactions not involving a broker or dealer. In effecting sales,
brokers or dealers engaged to sell shares may arrange for other brokers or
dealers to participate. Brokers or dealers engaged to sell shares will receive
compensation in the form of commissions or discounts in amounts to be negotiated
by RF and KM, as the case may be, immediately prior to each sale. The Company
will receive no proceeds from any sales of Common Stock by RF or KM. RF and KM
and the brokers and dealers through whom sales of the shares are made may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any profits realized by them on the sale of
the shares may be considered to be underwriting compensation.
No other person is authorized to give any information or make any
representation not contained or incorporated by reference in this Prospectus in
connection with the offer contained in this Prospectus, and, if given or made,
such other information or representation must not be relied upon as having been
authorized by the Company. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of the Company since the date hereof.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY
OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES COVERED BY THIS PROSPECTUS,
NOR DOES IT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
The date of the Prospectus is May 11, 1998.
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TABLE OF CONTENTS
Page
AVAILABLE INFORMATION.....................................................1
INFORMATION INCORPORATED BY REFERENCE.....................................2
THE COMPANY...............................................................3
RICHARD FISHER, AND KENNEDY MILES & ASSOCIATES,
LTD., CONSULTING AGREEMENTS..........................................3
WARRANT TERMS AND PROVISIONS..............................................3
FEDERAL INCOME TAX EFFECTS................................................4
RESTRICTIONS UNDER SECURITIES LAWS........................................5
TRANSFER AGENT............................................................5
LEGAL MATTERS.............................................................5
EXPERTS...................................................................5
STATEMENT ON INDEMNIFICATION..............................................6
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AVAILABLE INFORMATION
Enhanced Services Company, Inc. (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), and,
in accordance therewith, files reports and other materials with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements and other
materials filed by the Company can be inspected and copied (at prescribed rates)
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, such reports, proxy
statements and other information can also be inspected and copied at the offices
of the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), with respect to an aggregate of 125,000 Shares of the Company's Common
Stock, which may be issued to "RF" and "KM", consultants of the Company, upon
the exercise of common stock purchase warrants issued to said consultant,
pursuant to a written consulting agreement. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain portions of
which have been omitted as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the shares
of the Common Stock offered by this Prospectus, reference is made to the
Registration Statement, including the exhibits thereto. Statements in this
Prospectus as to any document are not necessarily complete, and where any such
document is an exhibit to the Registration Statement or is incorporated by
reference herein, each such statement is qualified in all respects by the
provisions of such exhibit or other document, to which reference is hereby made,
for a full statement of the provisions thereof. A copy of the Registration
Statement, with exhibits, may be obtained from the Commission's office in
Washington, D.C. (at the above address) upon payment of the fees prescribed by
the rules and regulations of the Commission, or examined there without charges.
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INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the SEC are incorporated herein by
reference:
1. The Company's latest Annual Report on Form 10-KSB for its fiscal year
ended November 30, 1997;
2. All other reports filed pursuant to Section 13 or 15(d) of the 1934
Act since the end of the fiscal year covered by the Annual report on Form 10-K
referred to in item 1 above; and
3. The description of the Common Stock contained in the Company's
registration statement on Form 10-SB, filed under section 12 of the 1934 Act
including any amendment or report updating such description.
All reports and other documents subsequently filed by the Company
pursuant to sections 13(a), 13(c), 14 and 15(d) of the 1934 Act prior to the
termination of the offering shall be deemed to be incorporated by reference
herein and to be a part hereof form the date of the filing of such reports and
documents.
THE COMPANY HEREBY UNDERTAKES TO FURNISH WITHOUT CHARGE TO EACH PERSON TO WHOM
THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS DESCRIBED ABOVE, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS. REQUESTS SHOULD BE ADDRESSED TO ENHANCED SERVICES COMPANY, INC.,
16000 BARKERS POINT LANE, HOUSTON, TEXAS 77079, TELEPHONE NUMBER, ATTENTION:
SECRETARY-TREASURER (713) 556-5051.
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THE COMPANY
The Company was incorporated under the laws of the State of Colorado on March
16, 1987 as Crystal Venture Fund, Inc. The Company provides upgrade, repair and
maintenance and asset management services for users of portable computers, as
well as multimedia presentation development services. The Company's principal
executive offices are located at 16000 Barkers Point Lane, Houston, Texas 77079,
and its telephone number is (713) 556-5051.
RICHARD FISHER, AND KENNEDY MILES & ASSOCIATES, LTD., CONSULTING AGREEMENTS
Effective April 1, 1998, the Company entered into the Consulting Agreements with
each of KM and RF. Under the terms of their respective Agreements, KM will
provide consulting services with respect to matters concerning: (i) strategic
planning and implementation of the business development and affairs of the
Company, (ii) future business and strategic opportunities available in the
United Kingdom, (iii) providing management and strategic oversight for the
assessment and reorganization of the London-based operations formerly conducted
by Softbank Interactive Marketing, Inc., and (iv) involvement in and the
prospects for use of the London facilities and opportunities and the future
operations or conduct of business in the London-based markets. RF will provide
consulting services with respect to (i) strategic planning, (ii) legal affairs
and (iii) corporate finance and industry analysis. The term of each of the
Agreements shall commence on April 1, 1998 and will continue for a period of one
year unless sooner terminated as provided therein.
In consideration for their respective agreements to provide the listed services,
pursuant to the Agreements the Company issued to each of RF as a consulting and
advisory fee, common stock purchase warrants ("Warrants"), to purchase an
aggregate of 50,000 Shares of the Company's Common Stock at an exercise price
$4.00, and issued to KM, as a consulting fee, Warrants to purchase an aggregate
of 75,000 Shares of the Company's Common Stock at an exercise price $2.00 The
Warrants were issued as of May 11, 1998, expire on May 12, 2000 and are
exercisable in whole or part until then.
WARRANT TERMS AND PROVISIONS
All of the Warrants were issued pursuant to the Agreement and were not issued
pursuant to any program or plan being administered by either the Board of
Directors of the Company or any committee of the Board of Directors organized
for that purpose. The specific terms of the Warrants are as follows:
(a) WARRANT EXERCISE PRICES. The exercise prices per share of Common
Stock issuable or exercisable on the Warrants set forth above were established
by the Board of Directors based on negotiations with reference to the average of
the bid prices for the Company's Common Stock as reported on the SmallCap Market
of the National Association of Securities Dealers, Inc. during March and April,
1997, when the Company and RF and KM concluded negotiations of the Warrants and
the Agreement, when such average price was in the $5.00 range.
(b) TERM OF WARRANTS. The Warrants may be exercised in whole or in part
at any time through May 12, 2000 unless the expiration date of the Warrant and
the term of the Consulting Agreement are extended by the Company in writing to a
later date.
(c) MANNER OF EXERCISE. RF and KM may exercise all or any whole number
of such Warrants for cash during the term of the Warrants.
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(d) TRANSFERABILITY. The Warrants are not transferable without the
Company's prior written approval.
(e) REDEMPTION. There are no redemption rights afforded to the Company
in connection with the Warrants.
(f) ADJUSTMENTS. The number of shares of Common Stock of the Company
purchasable upon exercise of the Warrants and the exercise price of the Warrants
are subject to adjustment upon the occurrence of specified events primarily
involving stock dividends, stock splits, reorganizations, reclassifications,
consolidations and mergers.
(g) NO RIGHT AS STOCKHOLDER. RF and KM are not, by virtue of ownership
of the Warrant, entitled to any rights whatsoever of a stockholder of the
Company.
FEDERAL INCOME TAX EFFECTS
A Warrant holder does not recognize taxable income on the date of the grant of
the Warrant, which is a non-statutory option, but recognizes ordinary income
generally at the date of exercise in the amount of the difference between the
Warrant exercise price and the fair market value of the common Stock on the date
of exercise. However, in the event that the holder is, or may become, subject to
the restrictions on resale of common stock under Section 16 of the Securities
Exchange Act of 1934, such person generally recognizes ordinary income at the
end of the six-month period following the date of exercise in the amount of the
difference between the warrant exercise price and the fair market value of the
common stock at the end of the six-month period. Nevertheless, such holders may
elect within 30 days after the date of exercise to recognize ordinary income as
of the date of exercise. The amount of ordinary income recognized by the Warrant
holder is deductible by the company in the year that income is recognized. The
foregoing is not intended to be a complete statement of applicable law and RF
and KM each should rely on their own legal counsel with respect thereto.
RESTRICTIONS UNDER SECURITIES LAWS
The sale of any shares of Common Stock acquired upon the exercise of the
Warrants must be made in compliance with federal and state securities laws.
Officers, directors and 10% or greater stockholders of the Company, as well as
certain other persons or parties who may be deemed to be "affiliates" of the
Company under the Federal Securities Laws, should be aware that resales by
affiliates can only be made pursuant to an effective Registration Statement,
Rule 144 or any other applicable exemption. Officers, directors and 10% and
greater stockholders are also subject to the "short swing" profit rule of
Section 16(b) of the Securities Exchange Act of 1934. Section 16(b) of the
Exchange Act generally provides that if an officer, director or 10% and greater
stockholder sold any Common Stock of the Company acquired pursuant to the
exercise of a stock option, he would generally be required to pay any "profits"
resulting from the sale of the stock and receipt of the stock option. Section
16(b) exempts all warrant exercises from being treated as purchases and,
instead, treats a warrant grant as a purchase of the underlying security, which
grant\purchase may be matched with any sale of the underlying security within
six months of the date of grant. The foregoing is not intended to be a complete
statement of applicable law and RF and KM should rely on their own legal counsel
with respect thereto.
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TRANSFER AGENT
The Transfer Agent for the shares of common stock is the Corporate Stock
Transfer Co., 370 17th Street, Denver, Colorado 80202.
LEGAL MATTERS
Certain legal matters in connection with the securities offered hereby are being
passed upon for the Company by Justin Walker, Associate General Council.
EXPERTS
The audited consolidated financial statements of the Company incorporated by
reference in this Prospectus have been so incorporated in reliance on the report
of Schumacher & Associates, Inc., independent certified public accountants,
given on the authority of said firm as experts in auditing and accounting.
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STATEMENT ON INDEMNIFICATION
Under provisions of the Company's Amended and Restated Articles of
Incorporation, any person made a party to any lawsuit by reason of being a
director or officer of the Company, or any parent or subsidiary thereof, shall
be indemnified by the Company to the full extent authorized by the Colorado
Corporation Code, as amended. Said Code was repealed on July 1, 1994 and was
replaced by articles 101-117 of the Colorado Business Corporation Act.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is
therefore unenforceable.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed in (a) through (c) below are incorporated by reference in
the Registration Statement. All documents subsequently filed by the Registrant
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference in the Registration Statement and to be part thereof
from the date of filing of such documents.
(a) The Registrant's Annual Report on Form 10-KSB for the fiscal
year ended November 30, 1994 and the Registrant's effective registration
statement on Form 10-SB;
(b) All other reports filed pursuant to Section 13 or 15(d) of
the Exchange Act since the end of the fiscal year covered by the Registrant's
Form 10-KSB referred to in (a) above.
(c) The class of securities to be offered hereby is registered
under Section 12 of the Exchange Act. A description of the Registrant's
securities is set forth in Item 11 of its Form 10-SB which is incorporated as a
part of this Registration Statement.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
a. Article VIII of Registrant's Amended and Restated Articles of
Incorporation provides:
The Corporation may and shall indemnify each director, officer and any
employee or agent of the Corporation, his heirs, executors and administrators,
against any and all expenses or liability reasonably incurred by him in
connection with any action, suit or proceeding to which he may be a party by
reason of his being or having been a director, officer, employee or agent of the
Corporation to the full extent required or permitted by the Colorado Corporation
Code, as amended." Said Code was repealed on July 1, 1994 and was replaced by
articles 101-117 of the Colorado Business Corporation Act.
b. Article 109 of the Colorado Business Corporation Act provides that:
7-109-101. DEFINITIONS. As used in this article:
(1) "Corporation" includes any domestic or foreign predecessor entity of
the corporation in a merger, consolidation, or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation is or was
serving at the corporation's request as a director, officer, partner, trustee,
employee, fiduciary, or agent of another foreign or domestic corporation or
other person, or of an employee benefit plan. A director shall be considered to
be serving an employee benefit plan at the corporation's request if his duties
to the corporation also impose duties on or otherwise involve services by him to
the plan or to participants in or beneficiaries of the plan.
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"Director" includes, unless the context requires otherwise, the estate or
personal representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine including an excise tax
assessed with respect to an employee benefit plan, or reasonable expenses.
(5) "Official capacity", when used with respect to a director, means the
office of director in a corporation, and, when used with respect to a person
other than a director, as contemplated in Section 7-109-107 means the office in
a corporation held by the officer or the employment or agency relationship
undertaken by the employee fiduciary, or agent on behalf of the corporation.
"Official capacity" does not include service for any other foreign or domestic
corporation or any other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
and whether formal or informal.
7-109-102. AUTHORITY TO INDEMNIFY DIRECTORS. (1) Except as provided in
paragraph (4) of this section, a corporation may indemnify a person made a party
to a proceeding because the person is or was a director if:
(a) the person conducted himself in good faith;
(b) the person reasonably believed:
(I) In the case of conduct in an official capacity with
the corporation, that his conduct was in the corporation's best interests; or
(II) In all other cases, that his conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan for a
purpose he reasonably believed to be in the interests of the participants in or
beneficiaries of the plan is conduct that satisfies the requirements of
subparagraph (II) of paragraph (b) of subsection (1) of this section. A
director's conduct with respect to an employee benefit plan for a purpose that
he did not reasonably believe to be in the interests of the participants in or
beneficiaries of the plan shall be deemed not to satisfy the requirements of
paragraph (a) of subsection (1) of this section.
(3) The termination of any proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent, is not of
itself determinative that the director did not meet the standard of conduct
described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation; or
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(b) In connection with any proceeding charging improper personal
benefit to the director, whether or not involving action in his official
capacity, in which he was adjudged liable on the basis that he derived an
improper personal benefit proceeding.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of a corporation is limited to reasonable expenses
incurred in connection with the proceeding.
7-109-103. MANDATORY INDEMNIFICATION OF DIRECTORS. Unless limited by its
articles of incorporation, a corporation shall indemnify a person who was wholly
successful, on the merits or otherwise, in defense of any proceeding to which he
was a party because the person is or was a director, against reasonable expenses
incurred by him in connection with the proceeding.
7-109-104. ADVANCE OF EXPENSES TO DIRECTORS.
(1) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of the final
disposition of the proceeding if:
(a) The director furnishes the corporation a written affirmation
of his good-faith belief that he has met the standard of conduct described in
section 7-109-102;
(b) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay the advance if it is determined
that he did not meet such standard of conduct; and
(c) A determination is made that the facts then known to those
making the determination would not preclude indemnification under this article.
(2) The undertaking required by paragraph (b) of subsection (1) of this
section shall be an unlimited general obligation of the director, but need not
be secured and may be accepted without reference to financial ability to make
repayment.
(3) Determinations and authorizations of payments under this section
shall be made in the manner specified in section 7-109-106.
7-109-105. COURT-ORDERED INDEMNIFICATION OF DIRECTORS.
(1) Unless otherwise provided in the articles of incorporation, a
director who is or was a party to a proceeding may apply for indemnification to
the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court, after giving any notice
the court considers necessary, may order indemnification in the following
manner:
(a) If it determines the director is entitled to mandatory
indemnification under section 7-109-103, the court shall order indemnification
in which case the court shall also order the corporation to pay the director's
reasonable expenses incurred to obtain court-ordered indemnification.
(b) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances, whether
or not he met the standard of conduct set forth in section 7-109-102(1) or was
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adjudged liable in the circumstances described in section 7-109-102(4), the
court may order such indemnification as the court deems proper; except that the
indemnification with respect to any proceeding in which liability shall have
been adjudged in the circumstances described in section 7-109-102(4) is limited
to reasonable expenses incurred in connection with the proceeding and reasonable
expenses incurred to obtain court-ordered indemnification.
7-109-106. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION OF DIRECTORS.
(1) A corporation may not indemnify a director under section 7-109-102
unless authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because he
has met the standard of conduct set forth in section 7-109-102. A corporation
shall not advance expenses to a director under section 7-109-104 unless
authorized in the specific case after the written affirmation and undertaking
required by section 7-109-104(1)(a) and (1)(b) are received and the
determination required by Section 7-109-104(1)(c) has been made.
(2) The determinations required to be made by subsection (1) of this
section shall be made:
(a) By the board of directors by a majority vote of those present
at a meeting where a quorum is present, which quorum shall consist of directors
not parties to the proceeding; or
(b) If a quorum cannot be obtained, by a majority vote of a
committee of the board designated by the board, which committee shall consist of
two or more directors not parties to the proceeding; except that directors who
are parties to the proceeding may participate in the designation of directors
for the committee.
(3) If a quorum cannot be obtained and the committee cannot be
established under paragraph (b) of this section, or even if a quorum is obtained
or a committee designated, if a majority of the directors constituting such
quorum or committee so directs, the determination required to be made by
subsection (1) shall be made:
(a) By independent legal counsel selected by a vote of the board
of directors or the committee in the manner specified in paragraph (a) or (b) of
subsection (2) of this section or, if a quorum of the full board cannot be
obtained and a committee cannot be established, by independent legal counsel
selected by a majority vote of the full board; or
(b) By the shareholders.
(4) Authorization of indemnification and evaluation as to reasonableness
of expenses shall be made in the same manner as the determination that
indemnification is permissible; except that, if the determination that
indemnification is permissible is made by independent legal counsel,
authorization of indemnification and evaluation as to reasonableness of expenses
shall be made by the body that selected said counsel.
7-109-107. INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND AGENTS.
Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification pursuant
to section 7-109-103 of this section and is entitled to apply for
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court-ordered indemnification pursuant to section 7-109-105 in each case to the
same extent as a director;
(b) A corporation may indemnify or advance expenses to an
officer, employee, fiduciary or agent of the corporation who is not a director
to the same extent as to a director; and
(c) A corporation may also indemnify and advance expenses to an
officer, employee, fiduciary or agent of the corporation who is not a director
to a greater extent if not inconsistent with public policy, and if provided for
by its bylaws, general or specification of its shareholders or directors, or in
a contract.
7-109-108. INSURANCE.
A corporation may purchase and maintain insurance on behalf of a person
who is or was a director, officer, employee, fiduciary, or agent of the
corporation and who, while a director, officer, employee, fiduciary, or agent of
the corporation is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, fiduciary, or agent of any other
foreign or domestic corporation or other person or of an employee benefit plan,
against any liability asserted against or incurred by him in any such capacity
or arising out of his status as such, whether or not the corporation would have
the power to indemnify him against the same liability under 7-109-102,
7-109-103, or 7-109-107. Any such insurance may be procured from any insurance
company designated by the board of directors, whether such insurance company is
formed under the laws of this state or any other jurisdiction of the United
States or elsewhere, including any insurance company in which the corporation
has an equity or any other interest through stock ownership or otherwise.
7-109-109. LIMITATION OF INDEMNIFICATION OF DIRECTORS.
(1) A provision treating a corporation's indemnification of, or advance
of expenses to, directors that is contained in its articles of incorporation or
bylaws, in a resolution of its shareholders or board of directors, or in a
contract, except an insurance policy, or otherwise, is valid only to the extent
the provision is not inconsistent with sections 7-109-101 to 7-109-108. If the
articles of incorporation limit indemnification or advance of expenses,
indemnification and advance of expenses are valid only to the extent not
inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's power
to pay or reimburse expenses incurred by a director in connection with an
appearance as a witness in a proceeding at a time when he or she has not been
made a named defendant or respondent in the proceeding.
7-109-110. NOTICE TO SHAREHOLDERS OF INDEMNIFICATION OF DIRECTOR.
If a corporation indemnifies or advances expenses to a director under
this article in connection with a proceeding by or in the right of the
corporation, the corporation shall give written notice of the indemnification or
advance to the shareholders with or before the notice of the next shareholders'
meeting. If the next shareholder action is taken without a meeting at the
instigation of the board of directors, such notice shall be given to the
shareholders at or before the time the first shareholder signs a writing
consenting to such action. Article 108 of the Colorado Business Corporation Act
provides as follows:
5
<PAGE>
7-108-402. LIMITATION OF CERTAIN LIABILITIES OF DIRECTORS AND OFFICERS
(1) If so provided in the articles of incorporation, the corporation
shall eliminate or limit the personal liability of a director to the corporation
or to its shareholders for monetary damages for breach of fiduciary duty as a
director; except that any such provision shall not eliminate or limit the
liability of a director to the corporation or to its shareholders for monetary
damages for any breach of the director's duty of loyalty to the corporation or
to its shareholders, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, acts specified in section
7-108-403, or any transaction from which the director directly or indirectly
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director to the corporation or to its shareholders for
monetary damages for any act or omission occurring before the date when such
provision becomes effective.
(2) No director or officer shall be personally liable for any injury to
person or property arising out of a tort committed by an employee unless such
director or officer was personally involved in the situation giving rise to the
litigation or unless such director or officer committed a criminal offense in
connection with such situation. The protection afforded in this subsection (2)
shall not restrict other common-law protections and rights that a director or
officer may have. This subsection (2) shall not restrict the corporation's right
to eliminate or limit the personal liability of a director to the corporation or
to its shareholders for monetary damages for breach of fiduciary duty as a
director as provided in subsection (1) of this section.
6
<PAGE>
Item 8. EXHIBITS.
The following documents are filed as Exhibits to this Registration Statement:
4(a)-- Forms of Richard Fisher and Kennedy Miles Consulting Agreements.
4(b)-- Forms of Warrants
5 -- Opinion of Justin Walker, Associate General Counsel for the
Company, as to the validity of the shares being registered
24.1 -- Consent of Justin Walker, Associate General Counsel for the Company
24.2 -- Consent of Schumacher & Associates, Inc., Certified Public
Accountants
25 -- Power of Attorney (following signature page of Registration
Statement)
Item 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(i) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement: (i)
to include any prospectus required by Section 10(a)(3) of the Securities Act of
1933 (the "Act");
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
Provided, however, that paragraphs (i) and (ii) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 of Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for the purposes of determining any liability under the Act,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
7
<PAGE>
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described in Item 6 or otherwise, the registrant has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8, and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, and Los Angeles, State
of California, on the 11th day of May, 1998.
ENHANCED SERVICES COMPANY, INC. (Registrant)
By: /s/ Roger Mincheff
Roger Mincheff
President and Chief Executive Officer
By: /s/ Robert Smith
Robert Smith,
Chief Financial Officer and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
/s/ Robert Tourtelot
Robert Tourtelot
/s/ Roger Mincheff
Roger Mincheff
/s/ Paul Messina
Paul Messina
9
<PAGE>
INDEX TO EXHIBITS
NO. EXHIBIT PAGE
4(a) Forms of Richard Fisher and Kennedy Miles & Associates Consulting
Agreements
4(b) Forms of Warrants
5 Opinion of Justin Walker, Associate General Counsel, as to the
validity of the shares being registered
24.1 Consent of Justin Walker. Associate General Counsel
24.2 Consent of Schumacher & Associates, Inc., Certified Public Accountants
25 Power of Attorney (following signature page of Registration Statement)
10
EXHIBIT 4(A)
CONSULTING AGREEMENT
CONSULTING AGREEMENT ("Agreement"), entered into as of April 1, 1998
("Commencement Date") between Kennedy Miles Creative Communication, Ltd., a
corporation organized under the laws of the United Kingdom ("Kennedy") with a
business address at Redvers House, 13 Fairmile, Henry-on-Thames, Oxfordshire,
United Kingdom RG9 2JR and Enhanced Services Company, Inc. ("Enhanced"), a
Colorado corporation with its principal offices at 16000 Barkers Point Lane.
Houston, TX 77079.
WHEREAS, Kennedy is a corporation with experience in business affairs
and in assessing and providing oversight to business enterprises;
WHEREAS, Enhanced wishes to have the services of Kennedy available on a
consulting basis to advise it on business affairs and Kennedy is willing to act
in such capacity on the terms and conditions hereof;
NOW THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, Enhanced and Kennedy
hereby agree as follows:
1. EMPLOYMENT DUTIES AND AGREEMENTS
(a) Enhanced hereby retains Kennedy (the "Consulting
Arrangement"), as an independent contractor, on the terms
and conditions hereof as special advisor on business
affairs, with such duties, responsibilities, obligations
and powers commensurate with such roles, as are described
herein and which are reasonably assigned from time to time
by the Board of Directors of Enhanced and Kennedy hereby
accepts the Consulting Arrangement on the terms and
conditions hereof. Kennedy shall report to the Board of
Directors of Enhanced and shall devote such time as may be
necessary, on a part time basis, to the affairs of
Enhanced and, upon request, shall provide assistance to
Enhanced's other subsidiaries and affiliates
("Affiliates").
(b) It is understood and agreed that Kennedy shall be at all
times and for all purposes hereunder an independent
contractor to Enhanced and under no circumstances shall be
deemed an employee, partner or joint venturer of or with
Enhanced. Kennedy agrees that it shall not directly or
indirectly imply or represent to others, or permit another
to imply or represent to others that Kennedy has any
authority to act for, represent or bind Enhanced in any
matter by virtue of this Agreement.
(c) During the term of the Consulting Arrangement, Kennedy
shall participate in the strategic planning and
implementation of the business development and affairs of
Enhanced and, in particular, shall advise and consult with
Enhanced on the future business and strategic
opportunities available in the United Kingdom and shall be
responsible for providing management and strategic
oversight for the assessment and
<PAGE>
reorganization of the London-based operations formerly
conducted by Softbank Interactive Marketing, Inc., and
shall assist Enhanced in determining the best course of
conduct with respect to its involvement in and the
prospects for use of the London facilities, developing a
business plan identifying strategic partners and other
relationships and assessing overall opportunities for the
future operations or conduct of business in London-based
markets.
(d) Kennedy shall faithfully and diligently endeavor to
represent and to promote the business and best interests
of Enhanced and shall make available to Enhanced, when and
if requested, the general knowledge possessed by it
relating to any aspect of its duties and responsibilities
hereunder. Throughout the term of this Consulting
Arrangement, Kennedy shall provide services to Enhanced on
a part-time basis and may perform the same or similar
services for other persons or entities not inconsistent
with its undertakings hereunder.
(e) Kennedy shall keep accurate records showing the dates and
times devoted to the services provided for herein and a
description thereof, and shall present such records to
Enhanced on request.
(f) Kennedy hereby agrees to allow Enhanced, upon prior
written consent, to use its name, biography and likeness
in connection with information that may be disseminated
concerning Enhanced in a manner acceptable to Kennedy.
Kennedy agrees to actively participate, in a manner
consistent with its duties hereunder, on behalf of
Enhanced in the general promotion of Enhanced.
2. COMPENSATION
(a) As compensation for the performance by Kennedy of its
obligations hereunder during the Consulting Arrangement,
Enhanced hereby grants to Kennedy a stock purchase warrant
(the "Warrant"), to acquire Seventy-Five Thousand (75,000)
Common Shares of Enhanced at an exercise price of $0.10
per share and fully vested and exercisable on the date of
issuance and for two years thereafter.
(b) The Warrant to be delivered pursuant to this Agreement
shall be in the form set forth as Exhibit A, attached
hereto, with such appropriate insertions, omissions,
substitutions and other variations as required or
permitted by this Agreement.
(c) Notwithstanding the foregoing, the Warrant granted
hereunder shall terminate and be of no further legal force
or effect if, prior to the exercise of all or a portion of
the Warrant, this Agreement is terminated by the Company
for Cause pursuant to Paragraph 4 below, or if Kennedy
voluntarily terminates this Agreement during the Initial
Term. For purposes hereof, the effective date of
termination of the Warrant (if not previously exercised)
shall be as of (i) the date of written notice from
Enhanced of its election to terminate this Agreement for
"Cause", under Sections 4(b)(i)(b) and (c), provided the
Warrant (if not previously exercised) shall be reinstated
if the reason for such Agreement termination was cured by
Kennedy as provided in Section 4(b)(i)(c); or (ii) as of
the Commencement Date, if Kennedy voluntarily terminates
this
<PAGE>
Agreement during the Initial Term, but not later than May
15, 1999,
(d) REGISTRATION RIGHTS.
(i) On or before April 30, 1998 Enhanced shall use its
best efforts to cause to be prepared and filed with
the Securities and Exchange Commission ("SEC") a
Registration Statement on Form S-8 or any other
appropriate form registering all the shares of
Common Stock issuable upon exercise of the Warrant
(the "Registration Statement").
(ii) In connection with the preparation and filing of
the Registration Statement, Enhanced agrees to (1)
use its best efforts to cause such Registration
Statement to become and remain effective; (2)
prepare and file with the SEC such amendments and
supplements to such Registration Statement as may
be necessary to keep such Registration Statement
effective for the entire period the Warrant
remains outstanding; (3) furnish to Kennedy such
number of copies of a prospectus, in conformity
with the requirements of the Securities Act of
1933, as amended (the "Act"), and such other
documents as Kennedy may reasonably request in
order to facilitate the disposition of the Common
Shares underlying the Warrant; and (4) use its
best efforts, at Kennedy's request, to register
and qualify the Common Shares underlying the
Warrant of such states that Kennedy gives notice
to Enhanced, provided, however, that Enhanced
shall not be required in connection therewith to
(1) qualify generally to do business in any
jurisdiction where it would not otherwise be
required to qualify, (2) subject itself to any tax
or obligation to collect any tax in any such
jurisdiction, or (3) consent to general services
or process in such jurisdiction. Kennedy agrees to
cooperate in all reasonable respects with the
preparation and filing of the Registration
Statement.
(iii) All fees and other expenses incurred in connection
with the registration of the Common Shares
underlying the Warrant shall be borne by Enhanced,
including without limitation, fees of Enhanced's
legal counsel, SEC filing fees, printing costs,
accounting fees and costs, transfer agent fees and
any other miscellaneous costs and disbursements.
Kennedy shall be responsible for any and all
underwriting discounts, brokerage commissions or
other fees or expenses incurred in connection with
the sale or other disposition by Kennedy of the
Common Shares underlying the Warrant covered by
the Registration Statement.
(iv) To the extent permitted by law, Enhanced will
indemnify and hold harmless Kennedy, including its
officers, directors, employees, agents, and
representatives, against any losses, claims,
damages, liabilities, or expenses, including
without limitation attorney's fees and
disbursements, to which Kennedy may become subject
under the Act to the extent that such losses,
claims, damages or liabilities arise out of or are
based upon any violation by Enhanced of the Act or
under the Securities Exchange Act of 1934, or any
rule or regulation promulgated thereunder
<PAGE>
applicable to Enhanced, or arises out of or are
based upon any untrue or alleged untrue statement
of any material fact contained in the Registration
Statement, or arise out of or are based upon the
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, or arise out of any violation by
Enhanced of any rule or regulation promulgated
under the Act applicable to Enhanced and relating
to action or inaction required of Enhanced in
connection with such Registration Statement;
provided, however, that such indemnity contained
in this paragraph shall not apply to any loss,
damage or liability to the extent that same arises
out of, or is based upon, an untrue statement or
omission made in connection with such Registration
Statement in reliance upon and in conformity with
information furnished by Kennedy.
(v) Except for the obligations of Enhanced set forth in
Sections (i), (ii), (iii) and (iv) above, all
obligations relating to compliance with applicable
laws and regulations governing the distribution of
securities in connection with Kennedy's sale of
Common Shares of Enhanced acquired pursuant to the
exercise of the Warrant shall be the sole
obligation of Kennedy.
(vi) Kennedy agrees (absent proper "blue sky"
qualifications) that it will not sell the Common
Shares acquired upon the exercise of the Warrant in
any state other than the States of Colorado, New
York and such other states or foreign jurisdictions
where such Common Shares may be sold without any
further registration, qualification or action.
3. EXPENSES
(a) During the Consulting Arrangement, Enhanced shall pay or
reimburse Kennedy for all reasonable and necessary
out-of-pocket expenses incurred by Kennedy which relate to
its services hereunder and which have been approved, by an
agreed budget or otherwise, in advance of being incurred
with such payments or reimbursements to be made on
Enhanced's normal employee payroll schedule. Such
reimbursable expenses shall include, but not be limited
to, telephone, facsimile, office supplies and costs, and
travel expenses.
4. TERM AND TERMINATION
(a) The initial term ("Initial Term") shall be one (1) year
commencing on the Commencement Date, renewable, at
Enhanced's election ("Subsequent Term"). The Consulting
Arrangement will continue for the Initial Term and the
Subsequent Term unless terminated by a "Termination
Event", as defined below.
(b) For purposes of this Agreement, the following events shall
constitute "Termination Events":
(i) Termination of the Consulting Arrangement by
Enhanced for "Cause". For purposes of this
Agreement, the term "Cause", when used in
connection with the termination of the Consulting
Arrangement by Enhanced shall mean, and shall be
limited to, Kennedy's: (a) commission of any
fraudulent or criminal act; (b) failure to act on
behalf of Enhanced in breach of this Agreement
(including, without limitation, any violation of
Paragraph 5 hereof); or (c) a material breach of
this Agreement (which shall include Kennedy's
failure to substantially perform the duties
required of it hereunder for a period of 30
consecutive days) unless such breach shall be
cured by Kennedy within a period of thirty (30)
days after written notice by the Company of such
breach.
(ii) The voluntary termination of the Consulting
Arrangement by Kennedy effective upon 15 days
written notice; or
(iii) The expiration of the Initial Term or the
expiration of any Subsequent Terms when no
provision for renewals or extensions have been
made.
5. PROTECTION OF CONFIDENTIAL INFORMATION
(a) Kennedy acknowledges that during the course of its
services to Enhanced, it will acquire Proprietary
Information and Trade Secrets (as hereinafter defined), of
Enhanced. For purposes of this Agreement:
(i) "Proprietary Information" shall mean all
unpublished materials and information created,
discovered, owned or otherwise controlled by
Enhanced or its affiliates relating to the
products of Enhanced or its affiliates, including,
but not limited to financial information, data or
statements, product research and development,
existing and future product plans, designs and
schematics, patents, client lists, computer data,
documentation, algorithms, processes and know-how
(whether or not reduced to writing and whether or
not patentable or copyrightable), and business and
marketing plans and strategies, pricing policies,
cost and profit information, supplier identifies,
packaging and the like, whether disclosed orally,
in writing, or by inspection. "Proprietary
Information" shall also include all other
materials and information which have been clearly
identified by Enhanced as "Proprietary
Information", "Trade Secrets" or confidential
information. The term "Proprietary Information"
shall not include any information which is now
generally known or available or which hereafter
through no act or failure on the part of Kennedy
becomes generally known or available; and
(ii) "Trade Secrets" shall mean the whole or any
portion or phase of any scientific or technical
information, design, process, procedure, formula
or improvement related to the Technology which is
secret and is not generally available to the
public, which Enhanced or its affiliates both
marks and treats as "Confidential," and which
gives the one who uses it an advantage over
competitors who do not know of or use the Trade
Secret. A Trade Secret may include, without
limitation, Proprietary Information relating to
programs or products now existing or currently
under design or development by Enhanced or its
affiliates.
<PAGE>
(b) Non-Disclosure:
Kennedy agrees to hold the Proprietary Information and
Trade Secrets of which Kennedy may acquire knowledge
hereunder in the strictest confidence unless ordered to
disclose same subject to legal proceedings instituted by
third parties or as required to fulfill authorized
government requirements. Kennedy further agrees not to
disclose any Proprietary Information or Trade Secrets
except to the Board of Directors of Enhanced, employees,
advisers, counsel and consultants of Enhanced and its
affiliated companies, if any, on a "need to know basis"
and then only to those persons who reasonably require the
same for the purposes hereof and who are bound by a
confidentiality agreement consistent in format and
substance, with this Paragraph 5 and the policies of the
Board of Directors of Enhanced.
(c) Return of Documents and Materials
Kennedy shall deliver promptly upon the termination of the
Consulting Arrangement, and at any other time as Enhanced
may request, all documents, financial records, technology,
software, source codes, object codes, hardware (and all
copies thereof), in whatever medium, relating to the
business of Enhanced that Kennedy possesses or has under
its control.
6. CONFLICTING AGREEMENTS.
Kennedy warrants and represents that there are no existing or
proposed agreements to which it is a party that may adversely
affect Kennedy's ability to render its services to Enhanced
hereunder.
7. INDEMNIFICATION.
(a) Kennedy agrees to indemnify, defend and hold harmless
Enhanced, and the officers, directors, shareholders,
agents, employees of Enhanced, Enhanced's attorneys,
successors and assigns, from and against, and pay or
reimburse each of them for, any and all claims, losses,
damages, judgments, amounts paid in settlement, costs and
legal, accounting or other expenses that any of them may
sustain or incur as a result of any misrepresentation or
any non-performance of any covenant or other obligation on
the part of Kennedy contained in this Agreement.
(b) Enhanced agrees to indemnify, defend and hold harmless
Kennedy, and the officers, directors, shareholders,
agents, employees of Kennedy, Kennedy's attorneys,
successors and assigns, from and against, and pay or
reimburse each of them for, any and all claims, losses,
damages, judgments, amounts paid in settlement, costs and
legal, accounting or other expenses that any of them may
sustain or incur as a result of any misrepresentation or
any non-performance of any covenant or other obligation on
the part of Enhanced contained in this Agreement.
<PAGE>
8. ATTORNEY'S FEES.
In the event there is any litigation or arbitration between the
parties concerning this Agreement, the successful party shall be
awarded its reasonable attorneys' fees and litigation costs,
including the costs incurred in the collection of any judgment.
9. NOTICES.
(a) Any notice, request, instruction, or other document to be
given hereunder by any party hereto to any other party
hereto shall be in writing and delivered personally or by
overnight courier or sent by facsimile transmission:
If to Kennedy, to: Kennedy Miles Creative Communication,
Ltd.,
Redvers House
13 Fairmile
Henry-on-Thames
Oxfordshire, United Kingdom
RG9 2JR
If to Enhanced, to: Enhanced Services Company, Inc.
16000 Barkers Point Lane
Houston, TX 77079
phone: (800) 683-6839
fax: (281) 556-5035
or at such other address for a party as shall be specified
by like notice.
(b) All notices required or permitted to be given under this
Agreement shall be in writing. Notices may be served by:
(i) certified or registered mail postage pre-paid with
return receipt requested, or by private courier, prepaid;
(ii) by facsimile or other telecommunication device
capable of transmitting or creating a written record, with
a copy sent by U.S. mail or by personal delivery three
days after the initial facsimile transmission; or (iii)
personally. Mailed notices shall be deemed delivered three
days after mailing, properly addressed, return receipt
signed. Couriered notices shall be deemed delivered on the
date the courier warrants a delivery has occurred.
Facsimile notices shall be deemed delivered when receipt
is acknowledged by the addressee or its office. Personal
delivery shall be effective when accomplished upon
signature of receipt. All notices shall be given to the
parties at the addresses first given above unless a party
changes its address by giving notice to the other party as
provided herein.
10. MISCELLANEOUS PROVISIONS
(a) No provision of this Agreement shall be deemed to have
been waived unless such waiver is in writing signed by the
waiving party. No failure by any party to insist upon the
strict performance of any provision of this Agreement, or
to exercise any right or remedy consequent upon a breach
thereof, shall constitute a waiver of any such breach, of
such provision or any other provision. No waiver of any
provision of this Agreement shall be deemed a waiver of
any other provision of this Agreement or waiver of such
provision with respect to any subsequent breach, unless
expressly provided in writing.
<PAGE>
(b) This Agreement constitutes the entire Agreement of the
parties relating to the subject matter hereof. There are
no terms, conditions or obligations other than those
contained in this Agreement. This Agreement supersedes all
prior communications, representations or agreements
between the parties relating to the subject matter hereof.
This Agreement may not be amended except in writing
executed by the parties.
(c) The invalidity or unenforceability of any particular
provision of this Agreement shall not effect the other
provisions hereof; all of which shall remain enforceable
in accordance with their terms. Should any of the
obligations hereunder be found illegal or unenforceable,
such obligations shall be enforceable within whatever
terms a court of competent jurisdiction shall deem
allowable by law.
(d) Kennedy may not assign, sell, subcontract, delegate or
otherwise transfer its obligations under this Agreement,
without the prior written consent of Enhanced's Board of
Directors, and any attempted assignment or delegation
shall be void and without effect.
(e) This Agreement shall inure to the benefit of the
successors and assigns of Enhanced as if such Agreement
had been originally negotiated and entered into by and
between Kennedy and any such successors or assigns,
provided such successors or assigns undertake in writing
to perform all of Enhanced's obligations hereunder.
(f) This Agreement shall be governed by and construed in
accordance with the laws of the California for agreements
wholly negotiated, entered into and performed within the
State of California.
(g) Kennedy acknowledges that Enhanced and its affiliated
companies are new and evolving companies and that
protection of Proprietary Information, Confidential
Information, Work Product, Trade Secrets and
Opportunities, are important to future prospects for
growth and business development of Enhanced. Kennedy
acknowledges that Enhanced may not have an adequate remedy
at law in the event of any breach or threatened breach by
Kennedy of any provision of Paragraph 5 and that Enhanced
may suffer irreparable damage and injury as a result.
(h) The section headings in this Agreement are included for
convenience only; they do not give full notice of the
terms of any portion of this Agreement, and are not
relevant to the interpretation of any provision of this
Agreement.
(i) This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute
one agreement binding on all the parties, notwithstanding
that all parties are not signatories to the same
counterpart.
<PAGE>
(j) All rights and obligations shall cease upon termination of
this Agreement, except for the rights and obligations set
forth in or arising out of paragraphs 4 and 7(g), which
shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
KENNEDY MILES CREATIVE COMMUNICATION, LTD.
By: /s/ KENNEDY MILES
Title: Managing Director
ENHANCED SERVICES COMPANY, INC.
By: /s/ ROGER MINCHOFF
Title: President
<PAGE>
CONSULTING AGREEMENT
CONSULTING AGREEMENT ("Agreement"), commencing as of March 15, 1998
("Commencement Date") between Richard A. Fisher ("RAF"), an individual, with a
mailing address of P.O. Box 359, Newport, Rhode Island 02840, and Enhanced
Services Company, Inc. ("Enhanced"), a Colorado corporation, with its principal
offices at 16000 Barkers Point Lane, Houston, TX 77079.
WHEREAS, RAF is an attorney admitted to practice law in Massachusetts
and a businessman with experience in business affairs and in assessing and
providing oversight to business enterprises;
WHEREAS, Enhanced wishes to have the services of RAF available on a
consulting basis to assist it with strategic planning and corporate finance and
industry analysis, and to generally supervise its legal affairs with emphasis on
acquisitions and strategic relationships, and RAF is willing to act in such
capacity on the terms and conditions hereof;
NOW THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, Enhanced and RAF hereby
agree as follows:
1. EMPLOYMENT DUTIES AND AGREEMENTS
(a) Enhanced hereby retains RAF (the "Consulting Arrangement")
as an independent contractor, on the terms and conditions
hereof as special advisor on business affairs, with such
duties, responsibilities, obligations and powers
commensurate with such roles, as are described herein and
which are reasonably assigned from time to time by the
Board of Directors of Enhanced and RAF hereby accepts the
Consulting Arrangement on the terms and conditions hereof.
RAF shall report to the Board of Directors of Enhanced and
shall devote such time as may be necessary, on a part-time
basis, to the affairs of Enhanced and, upon request, shall
provide assistance to Enhanced's other subsidiaries and
affiliates ("Affiliates").
(b) It is understood and agreed that RAF shall be at all times
and for all purposes hereunder an independent contractor
to Enhanced and under no circumstances shall be deemed an
employee, officer, partner or joint venturer of or with
Enhanced. RAF agrees that he shall not directly or
indirectly imply or represent to others, or permit another
to imply or represent to others that RAF has any authority
to act for, represent or bind Enhanced in any matter by
virtue of this Agreement.
(c) During the term of the Consulting Arrangement, RAF shall
participate in the strategic planning and implementation
of the business development and affairs of Enhanced and,
in particular, shall advise and consult with Enhanced on
future business and strategic opportunities, and shall
supervise its legal affairs.
(d) RAF shall faithfully and diligently endeavor to represent
and to promote the business and best interests of Enhanced
and shall make available to Enhanced, when and if
requested, the general knowledge possessed by him relating
to any aspect of his duties and responsibilities
hereunder. Throughout the term of this Consulting
Arrangement, RAF shall provide services to Enhanced on a
part-time basis and may perform the same or similar
services for other persons or entities not inconsistent
with his undertakings hereunder.
(e) RAF shall keep accurate records showing the dates and
times devoted to the services provided for herein and a
description thereof, and shall present such records to
Enhanced on request.
(f) RAF hereby agrees to allow Enhanced to use his name,
biography and likeness in connection with information that
may be disseminated concerning Enhanced. RAF agrees to
actively participate, in a manner consistent with his
duties hereunder, on behalf of Enhanced in the general
promotion of Enhanced.
2. COMPENSATION
(a) As compensation for the performance by RAF of his
obligations hereunder during the Consulting Arrangement,
Enhanced hereby grants to RAF a stock purchase warrant
(the "Warrant") to acquire Fifty Thousand (50,000) Common
Shares of Enhanced at an exercise price of $4.00 per
share, which Warrant shall be fully vested and exercisable
on the date of issuance and for two years thereafter.
(b) The Warrant to be delivered pursuant to this Agreement
shall be in the form set forth as Exhibit A, attached
hereto, with such appropriate insertions, omissions,
substitutions and other variations as required or
permitted by this Agreement.
(c) Notwithstanding the foregoing, the Warrant granted
hereunder shall terminate and be of no further legal force
or effect if, prior to the exercise of all or a portion of
the Warrant, this Agreement is terminated by the Company
for Cause pursuant to Paragraph 4 below, or if RAF
voluntarily terminates this Agreement during the Initial
Term. For purposes hereof, the effective date of
termination of the Warrant (if not previously exercised)
shall be as of (i) the date of written notice from
Enhanced of its election to terminate this Agreement for
"Cause", under Section 4(b)(i), provided the Warrant (if
not previously exercised) shall be reinstated if the
reason for such Agreement termination was cured by RAF as
provided in Section 4(b)(i)(c); or (ii) as of the
Commencement Date, if RAF voluntarily terminates this
Agreement during the Initial Term, but not later than May
15, 1999,
<PAGE>
(d) REGISTRATION RIGHTS
(i) On or before May 15, 1998 Enhanced shall use its
best efforts to cause to be prepared and filed with
the Securities and Exchange Commission ("SEC") a
Registration Statement on Form S-8 or any other
appropriate form registering all the shares of
Common Stock issuable upon exercise of the Warrant
(the "Registration Statement").
(ii) In connection with the preparation and filing of
the Registration Statement, Enhanced agrees to (1)
use its best efforts to cause such Registration
Statement to become and remain effective; (2)
prepare and file with the SEC such amendments and
supplements to such Registration Statement as may
be necessary to keep such Registration Statement
effective for the entire period the Warrant
remains outstanding; (3) furnish to RAF such
number of copies of a prospectus, in conformity
with the requirements of the Securities Act of
1933, as amended (the "Act"), and such other
documents as RAF may reasonably request in order
to facilitate the disposition of the Common Shares
underlying the Warrant; and (4) use its best
efforts, at RAF's request, to register and qualify
the Common Shares underlying the Warrant in such
states that RAF gives notice to Enhanced;
provided, however, that Enhanced shall not be
required in connection therewith to (a) qualify
generally to do business in any jurisdiction where
it would not otherwise be required to qualify, (b)
subject itself to any tax or obligation to collect
any tax in any such jurisdiction, or (c) consent
to general service of process in such
jurisdiction. RAF agrees to cooperate in all
reasonable respects with the preparation and
filing of the Registration Statement.
(iii) All fees and other expenses incurred in connection
with the registration of the Common Shares
underlying the Warrant shall be borne by Enhanced,
including without limitation, fees of Enhanced's
legal counsel, SEC filing fees, printing costs,
accounting fees and costs, transfer agent fees and
any other miscellaneous costs and disbursements.
RAF shall be responsible for any and all
underwriting discounts, brokerage commissions or
other fees or expenses incurred in connection with
the sale or other disposition by RAF of the Common
Shares underlying the Warrant covered by the
Registration Statement.
(iv) To the extent permitted by law, Enhanced will
indemnify and hold harmless RAF, including his
employees, agents and representatives, against any
losses, claims, damages, liabilities, or expenses,
including without limitation attorney's fees and
disbursements, to which RAF may become subject
under the Act to the extent that such losses,
claims, damages or liabilities arise out of or are
based upon
<PAGE>
any violation by Enhanced of the Act or under the
Securities Exchange Act of 1934, or any rule or
regulation promulgated thereunder applicable to
Enhanced, or arises out of or are based upon any
untrue or alleged untrue statement of any material
fact contained in the Registration Statement, or
arise out of or are based upon the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading, or arise
out of any violation by Enhanced of any rule or
regulation promulgated under the Act applicable to
Enhanced and relating to action or inaction
required of Enhanced in connection with such
Registration Statement; provided, however, that
such indemnity contained in this paragraph shall
not apply to any loss, damage or liability to the
extent that same arises out of, or is based upon,
an untrue statement or omission made in connection
with such Registration Statement in reliance upon
and in conformity with information furnished by
RAF.
(v) Except for the obligations of Enhanced set forth in
Sections (i), (ii), (iii) and (iv) above, all
obligations relating to compliance with applicable
laws and regulations governing the distribution of
securities in connection with RAF's sale of Common
Shares of Enhanced acquired pursuant to the
exercise of the Warrant shall be the sole
obligation of RAF.
(vi) RAF agrees that he will not sell the Common Shares
acquired upon the exercise of the Warrant in any
state other than the States of Colorado, New York
and such other states or foreign jurisdictions
where such Common Shares may be sold without any
further registration, qualification or action.
3. EXPENSES
(a) During the Consulting Arrangement, Enhanced shall pay or
reimburse RAF for all reasonable and necessary
out-of-pocket expenses incurred by RAF which relate to his
services hereunder and which have been approved, by an
agreed budget or otherwise, in advance of being incurred
with such payments or reimbursements to be made on
Enhanced's normal employee payroll schedule. Such
reimbursable expenses shall include, but not be limited
to, telephone, facsimile, office supplies and costs, and
travel expenses.
4. TERM AND TERMINATION
(a) The initial term ("Initial Term") shall be one (1) year
commencing on the Commencement Date, renewable, at
Enhanced's election ("Subsequent Term") for an additional
one year period upon issuance of a comparable warrant, for
an additional fifty thousand (50,000) shares of Common
Stock of Enhanced. The Consulting Arrangement will
continue for the Initial Term and the Subsequent Term
unless terminated by a "Termination Event", as defined
below.
<PAGE>
(b) For purposes of this Agreement, the following events shall
constitute "Termination Events":
(i) Termination of the Consulting Arrangement by
Enhanced for "Cause". For purposes of this
Agreement, the term "Cause", when used in
connection with the termination of the Consulting
Arrangement by Enhanced shall mean, and shall be
limited to, RAF's: (a) commission of any
fraudulent or criminal act (other than a
misdemeanor [, etc.]); (b) failure to act on
behalf of Enhanced in breach of this Agreement
(including, without limitation, any violation of
Paragraph 5 hereof); or (c) a material breach of
this Agreement (which shall include RAF's failure
to substantially perform the duties required of
him hereunder for a period of 30 consecutive days)
unless such breach shall be cured by RAF, after
written notice to RAF, within a period of thirty
(30) days after written notice by Enhanced of such
breach.
(ii) The voluntary termination of the Consulting
Arrangement by RAF effective upon 15 days written
notice; or
(iii) The expiration of the Initial Term or the
expiration of any Subsequent Terms when no
provision for renewals or extensions have been
made.
5. PROTECTION OF CONFIDENTIAL INFORMATION
(a) RAF acknowledges that during the course of his services to
Enhanced, he will acquire Proprietary Information and
Trade Secrets (as hereinafter defined) of Enhanced. For
purposes of this Agreement:
(i) "Proprietary Information" shall mean all
unpublished materials and information created,
discovered, owned or otherwise controlled by
Enhanced or its affiliates relating to the
products of Enhanced or its affiliates, including,
but not limited to financial information, data or
statements, product research and development,
existing and future product plans, designs and
schematics, patents, client lists, computer data,
documentation, algorithms, processes and know-how
(whether or not reduced to writing and whether or
not patentable or copyrightable), and business and
marketing plans and strategies, pricing policies,
cost and profit information, supplier identifies,
packaging and the like, whether disclosed orally,
in writing, or by inspection. "Proprietary
Information" shall also include all other
materials and information which have been clearly
identified by Enhanced as "Proprietary
Information", "Trade Secrets" or confidential
information. The term "Proprietary Information"
shall not include any information which is now
generally known or available or which hereafter
<PAGE>
through no act or failure on the part of RAF
becomes generally known or available; and
(ii) "Trade Secrets" shall mean the whole or any portion
or phase of any scientific or technical
information, design, process, procedure, formula
or improvement related to the Technology which is
secret and is not generally available to the
public, which Enhanced or its Affiliates both mark
and treat as "Confidential," and which gives the
one who uses it an advantage over competitors who
do not know of or use the Trade Secret. A Trade
Secret may include, without limitation,
Proprietary Information relating to programs or
products now existing or currently under design or
development by Enhanced or its affiliates.
(b) Non-Disclosure
RAF agrees to hold the Proprietary Information and Trade
Secrets of Enhanced, of which RAF may acquire knowledge
hereunder, in the strictest confidence unless ordered to
disclose same subject to legal proceedings instituted by
third parties or as required to fulfill authorized
government requirements. RAF further agrees not to
disclose any Proprietary Information or Trade Secrets
except to the Board of Directors of Enhanced, employees,
advisers, counsel and consultants of Enhanced and its
affiliated companies, if any, on a "need to know basis"
and then only to those persons who reasonably require the
same for the purposes hereof and who are bound by a
confidentiality agreement consistent in format and
substance, with this Paragraph 5 and the policies of the
Board of Directors of Enhanced.
(c) Return of Documents and Materials
RAF shall deliver promptly upon the termination of the
Consulting Arrangement, and at any other time as Enhanced
may request, all documents, financial records, technology,
software, source codes, object codes, hardware (and all
copies thereof), in whatever medium, relating to the
business of Enhanced that RAF possesses or has under his
control.
6. CONFLICTING AGREEMENTS
RAF warrants and represents that there are no existing or
proposed agreements to which he is a party that may adversely
affect RAF's ability to render his services to Enhanced
hereunder.
<PAGE>
7. INDEMNIFICATION
(a) RAF agrees to indemnify, defend and hold harmless Enhanced
and the officers, directors, shareholders, agents and
employees of Enhanced, Enhanced's attorneys, successors
and assigns, from and against, and pay or reimburse each
of them for, any and all claims, losses, damages,
judgments, amounts paid in settlement, costs and legal,
accounting or other expenses that any of them may sustain
or incur as a result of any misrepresentation or any
non-performance of any covenant or other obligation on the
part of RAF contained in this Agreement.
(b) Enhanced agrees to indemnify, defend and hold harmless RAF
and the officers, directors, shareholders, agents and
employees of RAF, RAF's attorneys, successors and assigns,
from and against, and pay or reimburse each of them for,
any and all claims, losses, damages, judgments, amounts
paid in settlement, costs and legal, accounting or other
expenses that any of them may sustain or incur as a result
of any misrepresentation or any non-performance of any
covenant or other obligation on the part of Enhanced
contained in this Agreement.
8. ATTORNEY'S FEES
In the event there is any litigation or arbitration between the
parties concerning this Agreement, the successful party shall be
awarded its reasonable attorneys' fees and litigation costs,
including the costs incurred in the collection of any judgment.
9. NOTICES
(a) Any notice, request, instruction, or other document to be
given hereunder by any party hereto to any other party
hereto shall be in writing and delivered personally or by
overnight courier or sent by facsimile transmission:
If to RAF, to: P.O. Box 359
Newport, RI 02840
phone: (401) 245-5948
If to Enhanced, to: Enhanced Services Company, Inc.
16000 Barkers Point Lane
Houston, TX 77079
phone: (800) 683-6839
fax: (281) 556-5035
or at such other address for a party as shall be specified
by like notice.
(b) All notices required or permitted to be given under this
Agreement shall be in writing. Notices may be served by:
(i) certified or registered mail postage pre-paid with
return receipt requested, or by private courier, prepaid;
(ii) by facsimile or other telecommunication device
capable of transmitting or creating a written record, with
a copy sent by U.S. mail or by personal delivery three
days after
<PAGE>
the initial facsimile transmission; or (iii) personally.
Mailed notices shall be deemed delivered three days after
mailing, if properly addressed, with return receipt
signed. Couriered notices shall be deemed delivered on the
date the courier warrants a delivery has occurred.
Facsimile notices shall be deemed delivered when receipt
is acknowledged by the addressee or its office. Personal
delivery shall be effective when accomplished upon
signature of receipt. All notices shall be given to the
parties at the addresses first given above unless a party
changes its address by giving notice to the other party as
provided herein.
10. MISCELLANEOUS PROVISIONS
(a) No provision of this Agreement shall be deemed to have
been waived unless such waiver is in writing signed by the
waiving party. No failure by any party to insist upon the
strict performance of any provision of this Agreement, or
to exercise any right or remedy consequent upon a breach
thereof, shall constitute a waiver of any such breach, of
such provision or any other provision. No waiver of any
provision of this Agreement shall be deemed a waiver of
any other provision of this Agreement or waiver of such
provision with respect to any subsequent breach, unless
expressly provided in writing.
(b) This Agreement constitutes the entire Agreement of the
parties relating to the subject matter hereof. There are
no terms, conditions or obligations other than those
contained in this Agreement. This Agreement supersedes all
prior communications, representations or agreements
between the parties relating to the subject matter hereof.
This Agreement may not be amended except in a writing
executed by the parties.
(c) The invalidity or unenforceability of any particular
provision of this Agreement shall not effect the other
provisions hereof; all of which shall remain enforceable
in accordance with their terms. Should any of the
obligations hereunder be found illegal or unenforceable,
such obligations shall be enforceable within whatever
terms a court of competent jurisdiction shall deem
allowable by law.
(d) RAF may not assign, sell, subcontract, delegate or
otherwise transfer his obligations under this Agreement,
without the prior written consent of Enhanced's Board of
Directors, and any attempted assignment or delegation
shall be void and without effect.
(e) This Agreement shall inure to the benefit of the
successors and assigns of Enhanced as if such Agreement
had been originally negotiated and entered into by and
between RAF and any such successors or assigns, provided
such successors or assigns undertake in writing to perform
all of Enhanced's obligations hereunder.
<PAGE>
(f) This Agreement shall be governed by and construed in
accordance with the laws of the State of California for
agreements wholly negotiated, entered into and performed
within the State of California.
(g) RAF acknowledges that Enhanced and its affiliated
companies are new and evolving companies and that
protection of Proprietary Information, Confidential
Information, Work Product, Trade Secrets and
Opportunities, are important to future prospects for
growth and business development of Enhanced. RAF
acknowledges that Enhanced may not have an adequate remedy
at law in the event of any breach or threatened breach by
RAF of any provision of Paragraph 5 and that Enhanced may
suffer irreparable damage and injury as a result.
Accordingly, in the event of any such breach or threatened
breach, RAF hereby consents to Enhanced's application for
injunctive relief against it by any court of competent
jurisdiction without the posting of any bond or security
therefor.
(h) The section headings in this Agreement are included for
convenience only; they do not give full notice of the
terms of any portion of this Agreement, and are not
relevant to the interpretation of any provision of this
Agreement.
(i) This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute
one agreement binding on all the parties, notwithstanding
that all parties are not signatories to the same
counterpart.
(j) All rights and obligations shall cease upon termination of
this Agreement, except for the rights and obligations set
forth in or arising out of, Paragraphs 5 and 7, which
shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
RICHARD A. FISHER
/s/ RICHARD A. FISHER
ENHANCED SERVICES COMPANY, INC.
By: /s/ ROGER MENGHOFF
Title: President
EXHIBIT 4(B)
ENHANCED SERVICES COMPANY, INC.
WARRANT CERTIFICATE
Warrant No. 98-1 Warrant for 50,000 shares of Common Stock, $.001 par value
THIS WARRANT CERTIFIES THAT, for value received,) Richard Fisher ("RF"),
is the registered owner of a Warrant entitling RF, subject to the terms and
conditions hereinafter set forth, to subscribe for, purchase and receive 50,000
fully paid and non-assessable shares of Common Stock, $.001 par value (the
"Common Stock"), of Enhanced Services Company, Inc., a Colorado corporation (the
"Company"), subject to modification and adjustment as set forth herein, upon the
presentation and surrender of this Warrant Certificate at any time prior to the
Expiration Date (as hereinafter defined), at the business office of the Company,
and upon payment therefor of the exercise price ("Exercise Price") of $4.00 per
share of Common Stock, subject to modification and adjustment as set forth
herein. If the rights represented hereby shall not be exercised at or before the
Expiration Date, this Warrant shall become and be void without further force or
effect, and all rights represented hereby shall cease and expire.
This Warrant Certificate and the Warrant represented thereby are issued
pursuant to, and is subject in all respects to the terms and conditions set
forth in the Richard Fisher Consulting Agreement between the Company and RF
dated as of March 15, 1998 (the "Agreement"), to which reference is hereby made
for the provisions hereof. Unless the context indicates otherwise, capitalized
terms used herein without definition shall have the meaning ascribed to them in
the Agreement.
1. TERM OF WARRANT. The rights evidenced by this Warrant Certificate may
be exercised in whole or in part at any time, commencing upon the issuance
hereof and ending at 5:00 o'clock p.m., Central Time on May 12, 2000 unless the
Company agrees in writing to a later date ("Expiration Date"), except that, the
Warrants shall terminate in the event that the Agreement is terminated for
Cause, and prior to the date of such termination, the Warrant had not been
exercised as defined therein.
2. ADJUSTMENTS OF EXERCISE PRICE AND SHARES. If, and to the extent that,
the number of issued shares of Common Stock of the Company shall be increased or
reduced by change in par value, split up, reclassification, distribution of a
dividend payable in stock, or the like, the number of shares subject to the
Warrant and the exercise price per share shall be proportionately adjusted. If
the Company is reorganized or consolidated or merged with another corporation,
RF shall be entitled to receive warrants covering shares of such reorganized,
consolidated or merged company in the same proportion, at an equivalent price
and subject to the same conditions as the Warrant. Upon the happening of any
event requiring an adjustment of the exercise price or the number of shares
subject to this Warrant hereunder, the Company shall forthwith give written
notice thereto to RF stating the adjusted exercise price and the adjusted number
of shares purchasable upon the exercise
<PAGE>
hereof resulting from such event and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.
3. MANNER OF EXERCISE. RF may exercise all or any whole number of such
Warrants prior to the Expiration Date in the manner stated herein. RF must
provide the Company with not less than two (2) business days' prior written
notice prior to the exercise of any of the Warrant. The Exercise price shall be
payable in lawful money of the United States of America. On exercise, this
Warrant Certificate, together with the purchase form provided herein duly
executed by RF, plus payment of the Exercise Price in cash or by certified check
payable to the order of the Company, shall be surrendered to the Company. Upon
partial exercise of the rights evidenced by this Warrant Certificate, there
shall be issued to RF a new Warrant Certificate evidencing any unexercised
rights.
4. RESERVATION OF COMMON STOCK. The Company agrees that the number of
shares of Common Stock sufficient to provide for the exercise of the Warrant
upon the basis herein set forth will at all times during the term of this
Warrant be reserved for the exercise thereof.
5. ISSUANCE OF COMMON STOCK UPON EXERCISE. The Company, at its expense,
shall cause to be issued, as soon as practicable, but not later than ten (10)
days after exercise of this Warrant, a certificate or certificates in the name
of RF reflecting the number of shares of Common Stock to which RF is entitled
upon such exercise. All shares of Common Stock or other securities delivered
upon the exercise of the Warrants shall be validly issued, fully paid and
non-assessable.
6. NO RIGHT AS STOCKHOLDER. RF is not, by virtue of ownership of the
Warrant, entitled to any rights whatsoever of a stockholder of the Company.
7. REDEMPTION. The Company shall not have the right to redeem this
Warrant.
8. ASSIGNMENT. This Warrant MAY NOT be transferred or assigned by RF
without the Company's prior written approval (which, in its absolute discretion,
it may decline), and any purported transfer or assignment made without the
Company's prior written approval shall be void.
ENHANCED SERVICES COMPANY, INC.
Date: May 11, 1998 By:/s/ ROBERT SMITH
-----------------------------
Robert Smith, Chief Financial Officer
<PAGE>
ENHANCED SERVICES COMPANY, INC.
WARRANT CERTIFICATE
Warrant No. 98-2 Warrant for 75,000 shares of Common Stock, $.001 par value
THIS WARRANT CERTIFIES THAT, for value received,) Kennedy Miles Creative
Communication, Ltd. ("KM"), is the registered owner of a Warrant entitling KM,
subject to the terms and conditions hereinafter set forth, to subscribe for,
purchase and receive 75,000 fully paid and non-assessable shares of Common
Stock, $.001 par value (the "Common Stock"), of Enhanced Services Company, Inc.,
a Colorado corporation (the "Company"), subject to modification and adjustment
as set forth herein, upon the presentation and surrender of this Warrant
Certificate at any time prior to the Expiration Date (as hereinafter defined),
at the business office of the Company, and upon payment therefor of the exercise
price ("Exercise Price") of $2.00 per share of Common Stock, subject to
modification and adjustment as set forth herein. If the rights represented
hereby shall not be exercised at or before the Expiration Date, this Warrant
shall become and be void without further force or effect, and all rights
represented hereby shall cease and expire.
This Warrant Certificate and the Warrant represented thereby are issued
pursuant to, and is subject in all respects to the terms and conditions set
forth in the Consulting Agreement between the Company and KM dated as of April
1, 1998 (the "Agreement"), to which reference is hereby made for the provisions
hereof. Unless the context indicates otherwise, capitalized terms used herein
without definition shall have the meaning ascribed to them in the Agreement.
1. TERM OF WARRANT. The rights evidenced by this Warrant Certificate may
be exercised in whole or in part at any time, commencing upon the issuance
hereof and ending at 5:00 o'clock p.m., Central Time on May 12, 2000 unless the
Company agrees in writing to a later date ("Expiration Date"), except that, the
Warrants shall terminate in the event that the Agreement is terminated for
Cause, and prior to the date of such termination, the Warrant had not been
exercised as defined therein.
2. ADJUSTMENTS OF EXERCISE PRICE AND SHARES. If, and to the extent that,
the number of issued shares of Common Stock of the Company shall be increased or
reduced by change in par value, split up, reclassification, distribution of a
dividend payable in stock, or the like, the number of shares subject to the
Warrant and the exercise price per share shall be proportionately adjusted. If
the Company is reorganized or consolidated or merged with another corporation,
KM shall be entitled to receive warrants covering shares of such reorganized,
consolidated or merged company in the same proportion, at an equivalent price
and subject to the same conditions as the Warrant. Upon the happening of any
event requiring an adjustment of the exercise price or the number of shares
subject to this Warrant hereunder, the Company shall forthwith give written
notice thereto to KM stating the adjusted exercise price and the adjusted number
of shares purchasable upon the exercise hereof resulting from such event and
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
3. MANNER OF EXERCISE. KM may exercise all or any whole number of such
Warrants prior to the Expiration Date in the manner stated herein. KM must
provide the Company with not less than two (2) business days' prior written
notice prior to the exercise of any of the Warrant. The Exercise price
<PAGE>
shall be payable in lawful money of the United States of America. On exercise,
this Warrant Certificate, together with the purchase form provided herein duly
executed by KM, plus payment of the Exercise Price in cash or by certified check
payable to the order of the Company, shall be surrendered to the Company. Upon
partial exercise of the rights evidenced by this Warrant Certificate, there
shall be issued to KM a new Warrant Certificate evidencing any unexercised
rights.
4. RESERVATION OF COMMON STOCK. The Company agrees that the number of
shares of Common Stock sufficient to provide for the exercise of the Warrant
upon the basis herein set forth will at all times during the term of this
Warrant be reserved for the exercise thereof.
5. ISSUANCE OF COMMON STOCK UPON EXERCISE. The Company, at its expense,
shall cause to be issued, as soon as practicable, but not later than ten (10)
days after exercise of this Warrant, a certificate or certificates in the name
of KM reflecting the number of shares of Common Stock to which KM is entitled
upon such exercise. All shares of Common Stock or other securities delivered
upon the exercise of the Warrants shall be validly issued, fully paid and
non-assessable.
6. NO RIGHT AS STOCKHOLDER. KM is not, by virtue of ownership of the
Warrant, entitled to any rights whatsoever of a stockholder of the Company.
7. REDEMPTION. The Company shall not have the right to redeem this
Warrant.
8. ASSIGNMENT. This Warrant MAY NOT be transferred or assigned by KM
without the Company's prior written approval (which, in its absolute discretion,
it may decline), and any purported transfer or assignment made without the
Company's prior written approval shall be void.
ENHANCED SERVICES
COMPANY, INC.
Date: May 11, 1998 By/s/ ROBERT SMITH
--------------------------
Robert Smith, Chief Financial Officer
EXHIBIT 5
ENHANCED SERVICES COMPANY, INC.
16000 BARKERS POINT LANE
HOUSTON, TEXAS 77079
May 11, 1998
Securities and Exchange Commission
450 Fifth Street Northwest
Washington, D.C. 20549
RE: S.E.C. Registration Statement on Form S-8 of 125,000 Shares of
Common Stock of Enhanced Services Company, Inc.; COMMISSION FILE NO.
9-24256
Dear Ladies and Gentlemen:
I have acted as counsel to Enhanced Services Company, Inc. (the "Company)
in connection with a Registration Statement to be filed with the United States
Securities and Exchange Commission, Washington, D.C., pursuant to the Securities
Act of 1933, as amended, covering the registration of the aggregate of 125,000
shares of the Company's $.001 par value Common Stock (the "COMMON STOCK") which
may be issued to Kennedy Miles & Associates, Ltd. ("KMA"), and Richard Fisher
("FISHER"), consultants to the Company pursuant to the Consulting and Warrant
Compensation Agreements with KMA and Fisher (the "CONSULTING AND WARRANT
COMPENSATION AGREEMENTS") and otherwise, under Common Stock Purchase Warrants
exercisable to purchase up to 125,000 shares of the Company's Common Stock.
As a basis of my opinion expressed below, I have examined such records of
the Company, such certificates of public officials, and such other documents as
we have deemed relevant and necessary. I have assumed the conformity to the
originals of all copies and the authenticity of all originals. As to various
questions of fact to our material, I have relied, after due investigation, upon
inquiries made by myself of an officer or officers of the Company.
Based upon the foregoing, I am of the opinion as follows:
1. The Company has been duly incorporated and organized under the laws
of the State of Colorado and is validly existing as a corporation in
good standing under the laws of that State.
2. The Company's authorized capital consists of Twenty Million
(20,000,000) shares of Capital Stock of the Company, of which
15,000,000 shares are designated Common Stock having a par value of
$.001 per share and of which 5,000,000 are designated preferred
stock, having a par value of $.001 per share.
<PAGE>
3. The 125,000 shares of the Company's Common Stock proposed to be
issued pursuant to the exercise of Warrants granted under the
Consulting and Warrant Compensation Agreements and otherwise,
will, upon the exercise of such Warrants and the payment of the
warrant exercise price pursuant to the terms thereof and such
Warrants as more fully described in the Registration Statement,
be duly and validly authorized, legal issued, fully paid and
nonassessable.
Very truly yours,
Enhanced Services Company, Inc.
/s/ JUSTIN WALKER
Justin Walker
Associate General Counsel
EXHIBIT 24.1
ENHANCED SERVICES COMPANY, INC.
16000 BARKERS POINT LANE
HOUSTON TEXAS, 77079
EXHIBIT 24.1
May 11, 1998
Securities and Exchange Commission
450 Fifth Street Northwest
Washington, D.C. 20549
RE: S.E.C. Registration Statement on Form S-8 of 125,000 Shares of
Common Stock of Enhanced Services Company, Inc.; COMMISSION FILE NO.
9-24256
Dear Ladies and Gentlemen:
I hereby consent to the inclusion of my opinion regarding the legality of
the securities being registered by the Registration Statement to be filed with
the United States Securities and Exchange Commission, Washington, DC, pursuant
to the Securities Act of 1933, as amended, by Enhanced Services Company, Inc., a
Colorado corporation, in connection with its offering of up to 125,000 shares of
its common stock which may be issued pursuant to the Warrants granted under the
Consulting and Warrant Compensation Agreements with Kennedy Miles & Associates,
Ltd., and Richard Fisher, and otherwise, consultants to the Company, as more
fully described in such Registration Statement.
We further consent to the reference in such Registration Statement to my
having given such opinion.
Very truly yours,
Enhanced Services Company, Inc.
Justin Wilson
Associate General Counsel
EXHIBIT 24.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this registration
statement of Enhanced Services Company Inc. on Form S-8 of our report appearing
in and incorporated by reference in the Annual Report on Form 10-KSB, of
Enhanced Services Company, Inc. for the fiscal year ended November 30 1997. We
also consent to the reference to us under the heading "Experts" in the
prospectus constituting part of this Registration Statement.
/s/ SCHUMACHER & ASSOCIATES
Schumacher & Associates, Inc.
Certified Public Accountants
12835 East Arapahoe Road
Englewood, CO 80112
EXHIBIT 25
POWER OF ATTORNEY
We, the undersigned officers and directors of ENHANCED SERVICES COMPANY,
INC., hereby severally constitute and appoint Roger Mincheff and Robert Smith
and each of them (with full power to each of them to act alone), our true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for us and in our stead, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and all
documents relating thereto, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing necessary or advisable
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, we have executed this instrument on the dates set forth
below.
Date: May 11, 1998
/s/ Robert Tourtelot
Robert Tourtelot
/s/ Roger Mincheff
Roger Mincheff
/s/ Paul Messina
Paul Messina
