eSoft, Inc.
STOCK OPTION AGREEMENT
This Option Agreement is made and entered into by and between eSoft, Inc.,
a Colorado corporation (the "Company"), and Xxxxxxxx Consulting Group, Inc. (the
"Optionee"), as of the 11th day of November, 1997.
WITNESSETH:
WHEREAS, pursuant to a Consulting Agreement between the Company and
Pantheon Capital Ltd., dated September 2, 1997, as amended November 11, 1997,
the Company has agreed to grant to Pantheon Capital Ltd. options to purchase
150,000 shares of the Company's Common Stock; and
WHEREAS, Pantheon Capital Ltd. has assigned its rights to 37,500 of such
options to other parties;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, and for other good and valuable consideration, the
Company and Optionee agree as follows:
1. Grant of Option. The Company hereby grants to Optionee the right and
option (the "Option") to purchase an aggregate of 37,500 shares (such number
being subject to adjustment as provided in paragraph 9 hereof) of the common
stock of eSoft, Inc. (the "Stock") on the terms and conditions herein set forth.
This Option may be exercised in whole or in part and from time to time as
hereinafter provided.
2. Purchase Price. The price at which Optionee shall be entitled to
purchase the Stock covered by the Option shall be the price per share at which
shares of the Stock are first offered to the public in an initial public
offering of the Stock in Canada.
3. Term of Option. The Option hereby granted shall become exercisable
immediately after such an initial public offering is complete and remain in
force and effect until the normal close of business of the Company on the date
five years after the date that the Option becomes exercisable (the "Expiration
Date").
4. Exercise of Option. The Option may be exercised as to all or any part
thereof immediately after the closing of a public offering of the Company's
common stock, provided that such an offering is completed on or before December
31, 1998, and thereafter the Option may be exercised as to all or any part of
such shares (in not less than one hundred (100) share increments) at any time
and from time to time through the Expiration Date by delivery to the Company of
written notice of exercise and payment of the purchase price as provided in
paragraph 5 hereof.
5. Method of Exercising Option. Subject to the terms and conditions of this
Option Agreement, the Option may be exercised by timely delivery to the Company
of written notice, which notice shall be effective on the date received by the
Company (the "Effective Date"). The notice shall state Optionee's election to
exercise the Option, the number of shares in respect of which an election to
exercise has been made, and the exact name or names in which the shares will be
registered. Such notice shall be signed by the Optionee and shall be accompanied
by payment of the purchase price of such shares in cash or certified or
cashier's check in the amount of the full purchase price (the number of shares
being purchased multiplied by the price per share). In the event the Option
shall be exercised by a person or persons other than Optionee, such notice shall
be signed by such other person or persons and shall be accompanied by proof
acceptable to the Company of the legal right of such person or persons to
exercise the Option. All shares delivered by the Company upon exercise of the
Option as provided herein shall be fully paid and nonassessable upon delivery.
6. Transferability. The Option shall be transferable by Optionee only upon
presentation to the Company of this Option Agreement with a written assignment
duly executed by the Optionee, and such evidence of compliance with applicable
securities laws of the United States or Canada or any state or province thereof
as the Company shall reasonably require.
7. Adjustments in Number of Shares and Option Price. If any change is made
to the Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding stock as a class without the Company's receipt of consideration,
appropriate adjustments shall be made to the number and the purchase price per
share in effect under the Option. Such adjustments to the Option shall be
effected in a manner that shall preclude the enlargement or dilution of rights
and benefits under such options. Any adjustments determined by the Committee
shall be final, binding and conclusive.
If the Company shall be the surviving or resulting corporation in any
merger or consolidation, the Option granted hereunder shall pertain to and apply
to the securities or rights to which a holder of the number of shares of Stock
subject to the Option would have been entitled. The Optionee shall be entitled
to at least 20 days' prior written notice of any dissolution or liquidation of
the Company, or a merger or consolidation in which the Company is not the
surviving or resulting corporation.
8. Delivery of Shares. No shares of Stock shall be delivered upon exercise
of the Option until (i) the purchase price shall have been paid in full in the
manner herein provided; (ii) applicable taxes required to be withheld, if any,
have been paid or withheld in full; (iii) approval of any governmental authority
required in connection with the Option, or the issuance of shares thereunder,
has been received by the Company; and (iv) if required by the Company, Optionee
has delivered to the Company an investment letter in form and content
satisfactory to the Company as provided in paragraph 9 hereof.
9. Securities Act. The Company shall not be required to deliver any shares
of Stock pursuant to the exercise of all or any part of the Option if, in the
opinion of counsel for the
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Company, such issuance would violate the Securities Act of 1933 (the "1933 Act")
or any other applicable federal or state securities laws or regulations. The
Committee may require that Optionee, prior to the issuance of any such shares
Pursuant to exercise of the Option, sign and deliver to the Company a written
statement ("Investment Letter") stating (i) that Optionee is purchasing the
shares for investment and not with a view to the sale or distribution thereof;
(ii) that Optionee will not sell any shares received upon exercise of the Option
except pursuant to an effective registration statement under the 1933 Act or an
applicable exemption from the requirements for such registration; and (iii)
containing such other terms and conditions as counsel for the Company may
reasonably require to assure compliance with the 1933 Act or other applicable
federal or state securities laws and regulations. Such Investment Letter shall
be in form and content acceptable to the Company in its sole discretion.
If shares of Stock or other securities issuable pursuant to the
exercise of the Option have not been registered under the 1933 Act or other
applicable federal or state securities laws or regulations, such shares shall
bear a legend restricting the transferability thereof, such legend to be
substantially in the following form:
The shares represented by this certificate have not been registered
or qualified under federal or state securities laws. The shares may
not be offered for sale, sold, pledged or otherwise disposed of
unless so registered or qualified, unless an exemption exists or
unless such disposition is not subject to the federal or state
securities laws, and the availability of any exemption or the
inapplicability of such securities laws must be established by an
opinion of counsel, which opinion and counsel shall both be
reasonably satisfactory to the Company.
10. Governing Law. This Option Agreement shall be interpreted and
administered under the laws of the State of Colorado.
11. Amendments. This Option Agreement may be amended only by a
written agreement executed by the Company and Optionee.
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IN WITNESS WHEREOF, the Company and the Optionee have caused this
Option Agreement to be duly executed by their respective officers thereunto duly
authorized, and Optionee has hereunto set his hand as of the day and year first
above written.
eSoft, Inc.
By: /s/Xxxxxx X. Xxxxxx
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President
Xxxxxxxx Consulting Group, Inc.
By: /s/Xxxx Xxxxxxxx
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President
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