<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
February 26, 1999
COMMISSION NO. 0-24256
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
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)
3415 S. SEPULVEDA BOULEVARD
LOS ANGELES, CALIFORNIA 90034
(Address of Principal Executive Offices)
CONSULTING AND WARRANT COMPENSATION AGREEMENT
FOR
INTERSTOCK INVESTORS CORPORATION
(Full title of the Plan)
------------
ENHANCED SERVICES COMPANY, INC.
3415 S. SEPULVEDA BOULEVARD
LOS ANGELES, CALIFORNIA 90034
(Name and address of agent for service)
Telephone number, including area code of agent for service:
(310) 397-3003
------------
Copy to:
JUSTIN S. WALKER, ESQ.
3415 S. SEPULVEDA BOULEVARD
LOS ANGELES, CALIFORNIA 90034
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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
- ---------------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C>
Common Stock, 200,000(2) $ 0.50(3) $100,000 $ 29.50
$.001 par value
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
(2) Reflects shares of common stock issuable upon exercise of the Company's
Common Stock Purchase Warrants issued under the Interstock Investors
Corporation Consulting Agreement ("Warrants").
(3) Based on closing bid price of Company Common Stock on October 8, 1998.
<PAGE> 3
PROSPECTUS
ENHANCED SERVICES COMPANY, INC.
200,000 WARRANTS FOR SHARES OF COMMON STOCK
($.001 Par Value)
TO BE ISSUED PURSUANT TO INTERSTOCK INVESTORS CORPORATION
CONSULTING AND WARRANT COMPENSATION AGREEMENT
This Prospectus is part of a Registration Statement which registers an
aggregate 200,000 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 Interstock Investors Corporation ("Interstock") pursuant to
common stock purchase warrants ("Warrants") to purchase up to 200,000 Shares of
the Common Stock of the Company at an exercise price of $0.50 per share. The
Company has been advised by Interstock that it 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 Interstock, as the case may be, immediately prior
to each sale. The Company will receive no proceeds from any sales of Common
Stock by Interstock 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.
- -------------------------
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 January 1, 1999.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
AVAILABLE INFORMATION........................................................................1
INFORMATION INCORPORATED BY REFERENCE........................................................2
THE COMPANY..................................................................................3
INTERSTOCK INVESTORS CORPORATION CONSULTING AGREEMENT........................................3
WARRANT TERMS AND PROVISIONS.................................................................4
FEDERAL INCOME TAX EFFECTS...................................................................4
RESTRICTIONS UNDER SECURITIES LAWS...........................................................5
TRANSFER AGENT...............................................................................5
LEGAL MATTERS................................................................................5
EXPERTS......................................................................................5
STATEMENT ON INDEMNIFICATION.................................................................6
</TABLE>
<PAGE> 5
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 200,000 Shares of the Company's Common
Stock, which may be issued to Interstock Investors Corporation, consultant 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.
1
<PAGE> 6
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., 3415
S. SEPULVEDA BOULEVARD, LOS ANGELES, CA 90034, TELEPHONE NUMBER, ATTENTION:
SECRETARY-TREASURER (310) 397-3003.
2
<PAGE> 7
THE COMPANY
The Company was incorporated under the laws of the State of Colorado on March
16, 1987 as Crystal Venture Fund, Inc., and thereafter changed its name to
Enhanced Services Company, Inc. The Company's business is principally focused on
providing an Internet strategy that consolidates under a single flexible
corporate umbrella, Web-based advertising sales and technology, electronic
commerce and on-line shopping services. The Company also 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 3415 S. SEPULVEDA BOULEVARD,
LOS ANGELES, CALIFORNIA 90034, and its telephone number is (310) 397-3003.
INTERSTOCK INVESTORS CORPORATION, CONSULTING AGREEMENT
Effective January 1, 1999, the Company will enter into the Consulting Agreement
with Interstock. Under the terms of the respective Agreement, Interstock will
provide consulting services with respect to matters concerning strategic
planning, implementation of business development planning and Internet industry
analysis. The term of the Agreement shall commence on January 1, 1999, and will
continue for a period of five years.
In consideration for the respective agreement to provide services, pursuant to
the Agreement, the Company issued to Interstock as a consulting fee, common
stock purchase warrants ("Warrants"), to purchase an aggregate of 200,000 Shares
of the Company's Common Stock at $.001 par value, at an exercise price of $0.50.
The Warrants will be issued as of January, 1999, expire on December 1, 2005
and are exercisable in whole or part until then.
3
<PAGE> 8
WARRANT TERMS AND PROVISIONS
All of the Warrants were issued pursuant to the Consulting 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. based on closing bid
price of Company Common Stock on October 8, 1998, when the Company and
Interstock concluded negotiations of the Warrants and the Agreement.
(b) TERM OF WARRANTS. The Warrants may be exercised in whole or in
part at any time through December 1, 2005 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. Interstock may exercise all or any whole
number of such Warrants for cash or a full recourse promissory note, during the
term of the Warrants.
(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. INTERSTOCK is not, by virtue of
ownership of the Warrants, 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
4
<PAGE> 9
complete statement of applicable law and Interstock should rely on its 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 resale 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 Interstock should rely on its legal counsel
with respect thereto.
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 S. Walker, General Counsel, Enhanced
Services Co., Inc., 3415 S. Sepulveda Boulevard, Los Angeles, California 90034.
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.
5
<PAGE> 10
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.
6
<PAGE> 11
PART II
INFORMATION REQUIRED IN THE WARRANT 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, 1997 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
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<PAGE> 12
by him to the plan or to participants in or beneficiaries of the plan.
"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.
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<PAGE> 13
(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
(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
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<PAGE> 14
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
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.
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<PAGE> 15
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 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.
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<PAGE> 16
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:
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.
II-6
<PAGE> 17
Item 8. EXHIBITS.
The following documents are filed as Exhibits to this Registration Statement:
<TABLE>
<S> <C>
4(a) -- Interstock Investors Corporation Consulting Agreement
5 -- Opinion of Justin S. Walker, Esq. as to the validity of the shares
being registered
24.1 -- Consent of Justin S. Walker, Esq.
25 -- Power of Attorney (following signature page of Registration Statement)
</TABLE>
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 securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-7
<PAGE> 18
(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.
II-8
<PAGE> 19
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 Los Angeles, State of California, on the 23rd
day of November, 1998.
ENHANCED SERVICES COMPANY, INC. (Registrant)
By: _____________________________________
Justin Walker, Vice President &
General Counsel
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/ JOSEPH SEARLES Date: 11/24/98
- ------------------------------ ------------------------
Joseph Searles
/s/ KEITH MONTGOMERY Date: 11/24/98
- ------------------------------ ------------------------
Keith Montgomery
/s/ PAUL MESSINA Date: 11/24/98
- ------------------------------ ------------------------
Paul Messina
II-9
<PAGE> 20
POWER OF ATTORNEY
We, the undersigned directors of ENHANCED SERVICES COMPANY, INC., hereby
severally constitute and appoint Robert Smith and Justin Walker 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.
/s/ JOSEPH SEARLES Date: 11/24/98
- ------------------------------ ------------------------
Joseph Searles
/s/ KEITH MONTGOMERY Date: 11/24/98
- ------------------------------ ------------------------
Keith Montgomery
/s/ PAUL MESSINA Date: 11/24/98
- ------------------------------ ------------------------
Paul Messina
II-10
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NO. EXHIBIT PAGE
<S> <C>
4(a) Interstock Investors Corporation Consulting Agreement
4(b) Forms of Warrants
5 Opinion of Justin S. Walker, Esq. as to the validity of the shares being
registered
24.1 Consent of Justin S. Walker, Esq.
25 Power of Attorney (following signature page of Registration Statement)
</TABLE>
II-11
<PAGE> 1
Exhibit 4(a)
ENHANCED SERVICES COMPANY, INC.
Consulting Agreement
In consideration of the agreement of ENHANCED SERVICES COMPANY, INC. (the
"Company") to compensate INTERSTOCK INVESTORS CORPORATION as an independent
consultant ("Consultant") with respect to services previously rendered and, in
addition, to provide from time to time services for the term and at the
compensation rate specified below, Consultant agrees with the Company as
follows:
1. Performances of Services. The Company expressly acknowledges and
agrees that Consultant has performed substantial services for the Company prior
to the date hereto for which Consultant has not been compensated adequately,
including compensation paid pursuant to consulting agreements with one or more
affiliates of Consultant. Accordingly, the Company agrees that, although
Consultant is agreeing hereby to make itself available on a limited basis for
consulting services, substantially all of the fees payable hereunder are with
respect to such prior services and do not require the performance of any
services by Consultant in the future. The services that Consultant agrees hereby
to perform in the future shall consist generally of strategic planning,
implementation of business development planning and advice with respect to
corporate finance and Internet industry analysis.
2. Term. The term of this Agreement shall be for five years ("Term"),
commencing January 1, 1999. During the Term, Consultant agrees to make itself
available from time to time to perform services, but shall be not be required to
devote more than five hours per week or twenty hours per month to providing
services hereunder. On request, Consultant agrees to make itself available to
the Company's subsidiary and affiliated corporations.
3. Compensation and Expenses. The Company will pay compensation to
Consultant during the Term at the rate of $20,000 per month, without deduction.
In addition, the Company shall grant to Consultant a stock purchase warrant (the
"Warrant") to acquire two hundred thousand (200,000) shares of the common stock
of the Company ("Common Shares") at an exercise price of $0.50 per share, which
Warrant shall be fully vested and exercisable on the date of issuance and for
two years thereafter. The Warrant shall be substantially in the form set forth
as Exhibit A thereto. During the Term, the Company shall provide reimbursement
for office expenses in Rhode Island, including secretarial assistance, up to
$3,000 per month.
Consultant will be entitled to reimbursement of previously approved
expenses monthly in arrears upon submission of receipts and expense vouchers to
the Company. The Company agrees to provide first class airfare for trips on
Company business which are in excess of one and one-half hours flying time.
Reimbursable expenses shall include, but not be limited to, telephone,
facsimile, office supplies and costs, and travel expenses.
As additional consideration for compensation to be paid to Consultant,
Consultant agrees to allow the Company to use its name in connection with
information that may be disseminated concerning the Company.
4. Registration Rights. Within five business days after the effective
date hereof, the Company shall cause to be prepared and filed with the
Securities and Exchange ("SEC") a Registration Statement on Form S-8 or any
other appropriate form registering all the Common Shares issuable upon exercise
of the Warrant (the "Registration Statement"). In connection with the
preparation and filing of the Registration Statement, the Company agrees to (a)
use its best efforts to cause such Registration Statement to become and remain
effective; (b) 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;
INTERSTOCK INVESTORS CORPORATION
CONSULTING AGREEMENT
Page 1 of 5
<PAGE> 2
(c) furnish to Consultant 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 Consultant may reasonably request in order to
facilitate the disposition of the Common Shares underlying the Warrant; and (d)
at Consultant's request, to register and qualify the Common Shares underlying
the Warrant in such states that Consultant give notice to the Company,
provided, however, that the Company shall not be required in connection
therewith to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify, (ii) subject itself to any tax or
obligation to collect any tax in any such jurisdiction, or (iii) consent to
general services or process in such jurisdiction. Consultant agrees to
cooperate in all reasonable respects with the preparation and filing of the
Registration Statement.
All fees and other expenses incurred in connection with the registration
of the Common Shares underlying the Warrant shall be borne by the Company,
including without limitation, fees of the Company's legal counsel, SEC filing
fees, printing costs, accounting fees and costs, transfer agent fees and any
other miscellaneous costs and disbursements. Consultant 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
Consultant of the Common Shares underlying the Warrant covered by the
Registration Statement.
To the extent permitted by law, the Company will indemnify and hold
harmless Consultant, including its employees, agents, and representatives,
against any losses, claims, damages, liabilities or expenses, including without
limitation attorney's fees and disbursements, to which Consultant 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 the Company of the
Act or under the Securities Exchange Act or 1934, or any rule or regulation
promulgated thereunder applicable to the Company, or arises out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, or arises 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 the Company of any rule or regulation promulgated under the Act
applicable to the Company and relating to action or inaction required of the
Company in connection with such Registration Statement; provided, however, that
such indemnity contained in this section shall not apply to any loss, damage or
liabilities 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 Consultant.
Except for the obligations of the Company set for above in this Section 4,
all obligations relating to compliance with applicable laws and regulations
governing the distribution of securities in connection with Consultant's sales
of Common Shares of the Company acquired pursuant to the exercise of the
Warrant shall be the sole obligation of Consultant.
Consultant agrees 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.
5. Independent Contractor. In furnishing services, Consultant will at all
times be acting as an independent contractor and shall not be deemed an
employee, officer, partner or joint venturer of or with the Company. As such,
Consultant will not by reason this Agreement or its services hereunder be
entitled to participate in or to receive any benefit or right under any of the
Company's employee stock, benefit or welfare plans. Consultant agree to report
its compensation from the Company as income from self employment and to pay all
self employment and other taxes required by law to be paid with respect to such
compensation as and when the same shall become due and payable.
INTERSTOCK INVESTORS CORPORATION
CONSULTING AGREEMENT
Page 2 OF 5
<PAGE> 3
6. Company-Furnished Information, Materials and Equipment. All
information, materials or equipment furnished by the Company to Consultant or
acquired at the Company's expense by Consultant (herein collectively
"Company-furnished information") shall be and remain the sole property of the
Company. Consultant agrees to use Company-furnished information solely for the
benefit of the Company, to mark and handle all Company-furnished information in
accordance with established Company policy, and not to remove or permit the
removal of any Company-furnished information from the Company's premises
without its prior written consent. Consultant shall be fully responsible for
the case and protection of any Company-furnished information which may be in
its possession or custody or in the possession or custody of any person engaged
by Consultant and shall deliver all Company-furnished information to the
Company at its request upon completed of all work under this Agreement or upon
termination of this Agreement for any reason, whichever occurs first.
7. Consultant Work-Product. All right title and interest in and to any
work-product which Consultant or any person engaged by Consultant acquires,
compiles, authors, invents, makes or otherwise generates, in whole or in part,
including all works authored and all inventions made, for use in connection
with or arising out of or in relation to the services described in this
Agreement, whether or not copyrightable or patentable (hereinafter "Consultant
work-product"), shall belong exclusively to the Company. During and after the
term of this Agreement, Consultant shall execute, acknowledge, seal and deliver
all documents, including, without limitation, all instruments of assignment,
patent and copyright applications and supporting documentation, and perform all
acts, which the Company may request to secure its rights hereunder and to carry
out the intent of this Agreement. Consultant will use, mark, handle, protect
and deliver all Consultant work-product in the same manner as is provided in
Section 7 for Company-furnished information.
8. Confidentiality. During and after the term of this Agreement,
Consultant shall not, without first obtaining the written consent of the
Company, divulge or disclose to anyone outside the Company, whether by private
communication or by public address or publication, or otherwise, any
information not already lawfully available to the public concerning any and all
Company-furnished information, any or all information acquired by Consultant
during the course of its consulting services from or pertaining to any business
or licensors or customers of the Company, and any and all Consultant
work-product which is maintained in secrecy or confidence by the Company or by
any person or entity affiliated with the Company by employment, ownership,
participation in a joint venture, licensing arrangement, contract or otherwise.
All originals and copies of any specifications, technical and engineering
data, methods or reports, or other written materials relating to the business
of the Company, however and whenever produced, shall be the sole property of
the Company, not to be removed from its premises or custody without in each
instance first obtaining the prior written consent of the Company, and shall be
surrendered to the Company upon termination of Consultant's services under this
Agreement or otherwise. For the purposes of Sections 9 and 11 of this
Agreement, information and/or trade secrets which pass into the public domain
shall, after the time of such passing, no longer be considered confidential or
secret.
In addition, Consultant agrees that it will not directly or indirectly
publish or cause to be published any article containing or disclosing any
information about the Company or reported or received by the Company from any
corporation, firm or person with whom or for whom the Company shall be under
contract to provide research service, without prior written consent of the
Company.
9. Required Confidentiality Agreements. Consultants agree than no person
other than its authorized representatives shall have access to any confidential
Company-furnished information or confidential Consultant work-product.
Page 3 of 5
<PAGE> 4
10. Trade Secrets. Consultant will not, during the term of service to the
Company or thereafter, disclose to others or use for its own beneficiary any
trade secrets acquired from the Company, its customers, suppliers, consultants
or affiliates, except to the extent that the disclosure of such trade secrets
is necessary to perform its duties and fulfill its responsibilities as a
consultant to the Company. (A trade secret is information not generally known
to the trade which gives the Company an advantage over its competitors. Trade
secrets can include, by way of example, products under development, production
methods and processes, sources of supply, materials used in manufacture,
customer lists, costs of parts and materials, business and marketing plans, and
information concerning the filing or pendency of patent applications.)
11. Trade Secrets of Other Persons. Consultant agrees not to disclose or
use in the course of its consulting services with the Company any trade secrets
of any party other than the Company. If at any time it appears likely than any
aspect of Consultant's work for the Company may involve any such trade secret,
Consultant shall promptly withdraw such aspect of its work and give notice to
the Company of such withdrawal on the grounds of possible conflict of interest
without specifying the trade secret thus involved.
12. Conflict of Interest. Consultant agrees that it shall be its
responsibility to recognize, disclose and avoid any situation which might,
either directly or indirectly, adversely affect its judgment in acting for the
Company or which might otherwise involve a conflict between personal interest
and the interests of the Company.
13. Non-Solicitation. This Agreement is intended to secure to the Company
the help and cooperation of Consultant and to generate goodwill on the
Company's behalf. Consultant agrees that for a period of one year after the
termination of its consulting services with the Company for any reason,
Consultant will not solicit, induce, attempt to hire, or hire any employee of
the Company, or assist in such hiring by any other person, organization, firm
or business, or encourage any such employee to terminate his or her employment
with the Company.
14. Entire Agreement and Amendment. This Agreement fully expresses the
entire and only agreement between the Company and Consultant respecting its
services as a consultant. All prior and collateral understandings, agreements
and promises with respect thereto are merged into this Agreement. This
Agreement may not be modified, waived, or extended unless agreed to in writing
by both an authorized officer of the Company and Consultant.
15. Severability. In case any one or more of the provisions or part of a
provision contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or part of a provision had never been contained herein. In the event
that any provision of this Agreement shall be determined to be unenforceable by
any court of competent jurisdiction by reason of extending for too great a
period of time or over too large a geographic area or over too great a range of
activities, it shall be interpreted to extend only over the maximum period of
time, geographic area or range of activities as to which it may be enforceable.
16. Insurance. Consultant agrees to insure itself, and any consultant or
other person furnished by it, with all necessary insurance, including, but not
limited to, workmen's compensation, disability, unemployment and general
liability insurance, the amounts and coverage of which shall be in compliance
with all the applicable laws and sufficient adequately to compensate each such
person for any and all injury, loss or damage which may result from or arise
out of its performance of services under this Agreement. Consultant agrees
further to indemnify and hold the Company harmless from and against any such
injury, loss or damage and to defend, at its own expense, any action, claim or
proceeding for such injury, loss or damage brought by any such persons against
the Company.
INTERSTOCK INVESTORS CORPORATION
CONSULTING AGREEMENT
Page 4 of 5
<PAGE> 5
17. Applicable Law. This Agreement shall be construed, interpreted and
applied in accordance with the substantive laws of the State of California.
18. Notice. Any written notice to be given under the Agreement must be in
writing and delivered in person or given by registered or certified mail:
If to the Company, to:
Enhanced Services Company, Inc.
3415 S. Sepulveda Blvd.
Suite 500
Los Angeles, CA 90034
If to Consultant, to:
Interstock Investors Corporation
PO Box 359
Newport, RI 02840
19. Attorneys' Fees. In the event there is any litigation or arbitration
between the parties concerning this Agreement, the successful party shall be
awarded its attorneys' fees and litigation costs, including the costs incurred
in the collection of any judgment.
20. Assignment. Consultant agrees not to assign or delegate any right or
obligation under this Agreement.
21. Counterparts. 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.
Dated:
INTERSTOCK INVESTORS CORPORATION Accepted and agreed to:
By: /s/ M. A. O'NEILL ENHANCED SERVICES COMPANY, INC.
--------------------------
Vice President
By: /s/ JUSTIN WALKER
--------------------------
VP and General Counsel
Dated: October 8, 1998
INTERSTOCK INVESTORS CORPORATION
CONSULTING AGREEMENT
PAGE 5 OF 5
<PAGE> 1
EXHIBIT 4(B)
ENHANCED SERVICES COMPANY, INC.
WARRANT CERTIFICATE
Warrant No. 98-8 Warrant for 200,000 shares of Common Stock, $.001 par value
THIS WARRANT CERTIFIES THAT, for value received, Interstock Investors
Corporation ("Interstock"), is the registered owner of a Warrant entitling
Interstock, subject to the terms and conditions hereinafter set forth, to
subscribe for, purchase and receive 200,000 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 $0.50 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 Interstock Consulting Agreement between the Company and Interstock
dated as of October 8, 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., Pacific Time on December 1,2005 unless
the Company agrees in writing to a later date ("Expiration Date").
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,
Interstock 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 Interstock 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.
<PAGE> 2
3. MANNER OF EXERCISE. Interstock may exercise all or any whole number
of such Warrants prior to the Expiration Date in the manner stated herein.
Interstock must provide the Company with not less than one (1) business day's
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 or by the
delivery by Interstock of a full recourse promissory note ("Note") for a term
not to exceed 6 months with interest, payable at maturity at the rate of 6% per
annum. On exercise, this Warrant Certificate, together with the purchase form
provided herein duly executed by Interstock, plus payment of the Exercise Price
in cash or by certified check payable to the order of the Company, or by
delivery of the Note, shall be surrendered to the Company. Upon partial exercise
of the rights evidenced by this Warrant Certificate, there shall be issued to
Interstock 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, in accordance with Interstock's instructions within 2
business days after exercise of this Warrant, a certificate or certificates in
the name of Interstock reflecting the number of shares of Common Stock to which
Interstock 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. Interstock 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
INTERSTOCK 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: January 1, 1999 By: /s/ JUSTIN WALKER
------------------------------------
Justin Walker, Vice President &
General Counsel
<PAGE> 1
ENHANCED SERVICES COMPANY, INC.
3415 S. Sepulveda Boulevard
Los Angeles, California 90034
EXHIBIT 5
January 1, 1999
Securities and Exchange Commission
450 Fifth Street Northwest
Washington, D.C. 20549
RE: S.E.C. Registration Statement on Form S-8 of 200,000 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 200,000 shares of the Company's $.001 par value Common Stock (the
"COMMON STOCK") which may be issued to Interstock Investors Corporation,
("INTERSTOCK"), consultant to the Company pursuant to the Consulting and Warrant
Compensation Agreement with Interstock (THE "CONSULTING AND WARRANT COMPENSATION
AGREEMENT") and otherwise, under Common Stock Purchase Warrants exercisable to
purchase up to 200,000 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 I 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 related 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.
<PAGE> 2
Securities and Exchange Commission
January 1, 1999
Page 2
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, of which 5,000,000 are designated preferred
stock, having a par value of $.001 per share.
3. The 200,000 shares of the Company's Common Stock proposed to be
issued pursuant to the exercise of Warrants granted under the
Consulting and Warrant Compensation Agreement 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, legally issued, fully paid and
nonassessable.
Sincerely,
ENHANCED SERVICES COMPANY, INC.
/s/ JUSTIN WALKER
- -----------------------------------
Justin Walker, Esq.
<PAGE> 1
ENHANCED SERVICES COMPANY, INC.
3415 S. Sepulveda Boulevard
Los Angeles, California 90034
EXHIBIT 24.1
January 1, 1999
Securities and Exchange Commission
450 Fifth Street Northwest
Washington, D.C. 20549
RE: S.E.C. Registration Statement on Form S-8 of 200,000 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, D.C.,
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
200,000 shares of its common stock which may be issued pursuant to the Warrants
granted under the Consulting and Warrant Compensation Agreement with Interstock
Investors Corporation and otherwise, consultant to the Company, as more fully
described in such Registration Statement.
I further consent to the reference in such Registration Statement to my
having given such opinion.
Very truly yours,
ENHANCED SERVICES COMPANY, INC.
/s/ JUSTIN WALKER
- -----------------------------------
Justin Walker, Esq.
