10 million new ESVS shares to be issued!
This is something new in the capital structure that I haven't seen before. (Other than changes associated with the BFL acquisition.)
Check out part F. Has anybody heard of this "investor preferred" before? 100,000 shares, convertable into 100 shares of ESVS each, or 10 million shares of ESVS. Where did this pop-up from? To be issued on or prior to -today-.
Note: I've included all of 5.04 for completeness. It starts out talking about the capital structure of BFLAC, but then goes on to detail the capital structre of ESVS. This is from the acquisition agreement attached to the 8-K. The relevant portion starts with "As of November 12, 1998, the currently outstanding capital of ENHANCED was:"
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5.04 Capital Structure. The authorized capital stock of BFLAC consists of 1,000,000 shares of which seven hundred thousand (700,000) are shares of common stock, par value $.001 per share ("BFLAC Stock") and three hundred thousand (300,000) of which are preferred shares, to be issued on such terms and in such series as may be designated by the Board of Directors of BFLAC.
Currently there are one thousand (1,000) shares of BFLAC outstanding, all of which are held by ENHANCED. The authorized capital stock of ENHANCED currently consists of twenty million (20,000,000) shares of capital stock of which fifteen million (15,000,000) are shares of common stock, par value $.001 per share ("Enhanced Stock") and five million (5,000,000) are preferred shares to be issued on such terms and in such series as may be designated by the Board of Directors of ENHANCED.
As of November 12, 1998, the currently outstanding capital of ENHANCED was:
(a) Common Stock. Four million, four hundred and six thousand one hundred and eighteen (4,406,118) shares are issued and outstanding and two million, six hundred and sixty-eight thousand, seven hundred and ninety (2,668,790) shares were reserved for issuance on exercise of outstanding options and warrants as of November 12, 1998;
(b) 8.6% Preferred. 8.6% Cumulative Preferred Stock ("8.6% Preferred") of which fifteen thousand (15,000) shares are authorized and four thousand (4,000) shares are outstanding on the date hereof and are in the process of being converted to eight hundred thousand (800,000) shares of Enhanced Stock.
(c) 1998 Preferred. The 1998 Preferred Stock consisting of 1,000,000 shares, par value Three Dollars ($3.00), issued to Netvest Capital Partners LP, a Delaware limited partnership, in transactions implemented on March 6, 1998, which shares are convertible into five million, five hundred and forty-three thousand, six hundred (5,543,600) shares of Enhanced Stock solely at the option of ENHANCED after receipt of stockholder approval at the ENHANCED Annual Meeting of Stockholders convened in accordance with the NASDAQ Rules and the requirements of the Securities & Exchange Commission (the "SEC");
(d) 1998(B) Preferred. The 1998(B) Preferred Stock consisting of five hundred and twenty thousand (520,000) shares issued to ZULU-tek, Inc. in connection with the transactions implemented on September 9, 1998 and which shares shall be converted into five hundred and twenty thousand (520,000) of Enhanced Stock, subject to adjustment in the event of any stock splits, stock dividend, reclassifications or other capital transactions, as applicable, after receipt of stockholder approval at the ENHANCED Annual Meeting of Stockholders and there is an effective SEC registration statement allowing for the distribution of the ENHANCED Stock to the stockholders of ZULU-tek;
(e) 1998(C) Preferred. The 1998(C) Preferred Stock consisting of fifteen thousand (15,000) shares, stated value One Thousand Dollars ($1,000) per share, which shall be exchanged on a share for share basis for the outstanding ZULU-tek Series C Preferred Stock held by Softbank Holdings, Inc., OzEmail,Limited, and certain individuals in connection with the liquidation of ZULU-tek, subject to adjustment in the event of any stock splits, stock dividend, reclassifications or other capital transactions, as applicable, and subject to such terms and conditions as shall be negotiated with the holders and reflected in the proxy materials for the ENHANCED Annual Meeting of Stockholders; and
(f) Investor Preferred. The Investor Preferred Stock ("Investor Preferred") consisting of up to one hundred thousand (100,000) shares, stated value Fifty Dollars ($50) per share, to be issued on or prior to December 31, 1998 and to be convertible into Enhanced Stock on the basis of one hundred (100) shares of Enhanced Stock for each share of Investor Preferred, subject to adjustment in the event of any stock splits, stock dividend, reclassifications or other capital transactions, as applicable. To the extent required by the NASDAQ Rules, the Investor Preferred will be convertible only after receipt of stockholder approval at the ENHANCED Annual Meeting of Stockholders (including approval of an increase in the number of authorized shares). If requested by the holders, ENHANCED will file a registration statement with the SEC covering the resale of the Enhanced Stock to be issued upon the conversion of the Investor Preferred.
(g) Equity Commitments. The Enhanced Stock entitles each holder to one (1) vote for each share held. In addition to the outstanding capital stock, as of November 12, 1998, ENHANCED had commitments to issue two million, seventy-one thousand, two hundred and fifty-one (2,071,251) options and warrants, all of which are convertible, if exercised, into common stock on a one-for-one basis. Except for options, warrants and restricted securities which may be issued in connection with consulting or employment arrangements (including George P. Russell's Employment Agreement with BFL dated December 1, 1998) whether or not covered under the Amended and Restated Incentive Stock Plan of ENHANCED, or in financing or other corporate transactions which are currently in various stages of negotiation and may not be implemented, as of the date hereof, there are no other outstanding options, warrants or other rights, subscriptions, options, calls, rights, warrants, convertible securities, unsatisfied preemptive rights or other agreements or commitments of any character obligating ENHANCED to issue (or reserve for issuance) or to transfer or sell any shares of its capital stock of any class. No other classes of preferred shares have been designated or issued and, except upon any exercise of outstanding options and warrants, no additional shares of the capital stock of ENHANCED will be issued or reserved for issuance at or prior to the Closing. |
