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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 AMERICAN LINE INVESTMENTS, LTD. 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. Performance 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 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 $50,000 per month, without deduction.
In addition, the Company shall issue to Consultant three hundred fifty thousand
(456,500) shares of the common stock of the Company ("Common Shares").
During the Term, the Company shall pay all costs associated with the
operation of Consultant's office in California, including rent, office telephone
and facsimile, cellular and satellite phone service, furniture and equipment
leases, overnight delivery charges, general office expenses, online connections
and service fees, and the cost of administrative and secretarial assistants
whose aggregate compensation shall not exceed $150,000 per year. Consultant will
also 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.
4. Registration Rights. Within five business days after the date
hereof, the Company shall 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 Common Shares (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 not less
than two years; (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
AMERICAN LINE INVESTMENTS, LTD.
CONSULTING AGREEMENT
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disposition of the Common Shares; and (d) at Consultant's request, to register
and qualify the Common Shares in such states that Consultant gives 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 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
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 of 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 this Agreement shall be
the sole obligation of Consultant.
Consultant agrees that it will not sell the Common Shares acquired
pursuant to this Agreement 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 agrees 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.
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
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CONSULTING AGREEMENT
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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 care 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 completion
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 purpose 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.
10. Trade Secrets. Consultant will not, during the term of service to the
Company or thereafter, disclose to others or use for its own benefit any trade
secrets acquired from the Company, its customers, suppliers, consultants or
affiliates, except to the extent that the disclosure of such trade
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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 that 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 good will 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.
17. Applicable Law. This Agreement shall be construed, interpreted and
applied in accordance with the substantive laws of the State of California.
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CONSULTING AGREEMENT
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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:
American Line Investments, Ltd.
0000-0 Xxxxxxxx Xxxxxx
00-00 Xxxxx'x Xxxx Xxxx
Xxxx Xxxx
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:
AMERICAN LINE INVESTMENTS, LTD. Accepted and agreed to:
By: /s/ (illegible) ENHANCED SERVICES COMPANY, INC.
-------------------------------
its
By: /s/ XXXXXX XXXXXX
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AMERICAN LINE INVESTMENTS, LTD.
CONSULTING AGREEMENT
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