REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into this 2nd day of
September, 1997, between eSoft, Inc. (the "Company") and Transition Partners,
Limited ("Transition") and Pantheon Capital Ltd. ("Pantheon").
RECITALS
A. Transition and Pantheon have entered into agreements with the Company
pursuant to which Transition and Pantheon will provide consulting services to
the Company and be compensated therefore by receipt of shares of Common Stock
and/or options or warrants to purchase shares of Common Stock of the Company.
B. The Company intends to make a public offering of its shares of Common
Stock in Canada, and promptly after completion of that offering, to file a
registration statement covering its Common Stock under the Securities Exchange
Act of 1934 (the "1934 Act").
C. The Company has agreed to grant to Transition and Pantheon and to their
assigns certain rights relating to the registration of their shares of the
Company's Common Stock under the Securities Act of 1933 (the "1933 Act") after
the Company has registered its Common Stock under the 1934 Act.
IT IS THEREFORE AGREED:
1. Promptly after the completion of the public offering of shares of
Common Stock of the Company in Canada, the Company shall cause to be filed a
registration statement on Form 10-SB or other appropriate form to register the
Common Stock under the 1934 Act (the "1934 Act Registration").
2. At any time after the 1934 Act Registration has been filed with
the U.S. Securities and Exchange Commission ("SEC") either Pantheon or
Transition or their assigns may request that the Company file a registration
statement under the 1933 Act on Form S-3 or an equivalent form to register the
shares of the Company's Common Stock then held by said shareholder or issuable
to the shareholder pursuant to the exercise of options, warrants or other
rights, in order to permit the sale by such shareholder to the public of the
shares so registered.
3. Upon receipt of a request to register any of the shares under the
1933 Act on Form S-3, the Company shall immediately notify the other party to
this Agreement and all successors of the requesting shareholder or the other
party who own any of the shares of Common Stock or any of the options, warrants
or other securities under which shares of Common Stock are issuable that
were originally acquired pursuant to agreements between the Company and
Transition or Pantheon, to inform such persons that a registration statement has
been requested to be filed and offering to such persons the opportunity to have
their share then held or subject to acquisition included within the S-3
registration statement. The Company shall include in such registration all
shares with respect to which written request for inclusion are received by the
Company within twenty (20) days after such notice.
4. As promptly as possible after the Company receives such request
for registration on Form S-3 and has received responses from the persons to whom
it has furnished the notice required by paragraph 3 (but in no event sooner than
90 days after the effectiveness of the registration of the Company shares under
the 1934 Act), the Company shall cause to be filed a registration statement
registering all of the shares requested by the requesting shareholder and by
those who have responded to the aforesaid notice. In the event that the
registration statement is not filed with the SEC within 60 days after the
shareholder request (or within 60 days after the expiration of the 90 days if
the request is received before that date) the Company shall issue to the
requesting party additional shares equal to 10% of the shares of the requesting
party which were requested to be registered and the same number of additional
shares for each 30-day period beyond such 60-day period that such registration
statement is not filed.
5. Upon filing the registration statement on Form S-3, the Company
shall use all reasonable efforts to cause said registration statement to become
effective, including causing such amendments to the registration statement as
may be reasonably required and such exhibits and other documents to be filed as
may be reasonably necessary to accomplish that result.
6. Upon request by the requesting shareholder, the Company shall
also cause applications to be filed for registration of the shares for sale in
up to five states selected by the requesting shareholder to permit the sale of
the shares in such states pursuant to the registration requirements or an
exemption from such registration requirements of the laws of such states.
7. In connection with the aforesaid registration, the Company shall
agree to indemnify the shareholders against liability for false or misleading
information contained in the S-3 registration statement in accordance with usual
indemnification provisions attendant to such registrations. Each selling
shareholder whose shares are included within such registration statement shall
also indemnify the Company against liability for false or misleading information
included in the registration statement that has been provided to the Company by
such selling shareholder.
8. This Agreement is entered into in the State of Colorado and shall
be construed in accordance with the laws of such state.
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In witness whereof the parties have caused this agreement to be duly
executed by their duly authorized officer as of this 2nd day of September 1997.
eSOFT, INC.
By: /s/Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President
TRANSITION PARTNERS, LIMITED
By: /s/W. Xxxxxxxx Xxxxxxxx
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W. Xxxxxxxx Xxxxxxxx, President
PANTHEON CAPITAL LTD.
By: /s/Xxxx Xxxxx
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Xxxx Xxxxx, Director
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