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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
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(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
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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 xxxx 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, xxxx, 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.
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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
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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.
0000 X. Xxxxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, XX 00000
If to Consultant, to:
Interstock Investors Corporation
XX Xxx 000
Xxxxxxx, XX 00000
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. X'XXXXX ENHANCED SERVICES COMPANY, INC.
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Vice President
By: /s/ XXXXXX XXXXXX
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VP and General Counsel
Dated: October 8, 1998
INTERSTOCK INVESTORS CORPORATION
CONSULTING AGREEMENT
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