CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is entered into as of the 22nd day
of August, 1997 between eSoft, Inc., a Colorado corporation, with its principal
place of business at 00000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx (the
"Company"), and Pantheon Capital Ltd. (the "Consultant").
RECITALS
A. The Company desires to consult with and receive advice from the
Consultant and the Consultant has agreed to provide such consulting services to
the Company, subject to and upon the terms and conditions set forth in this
Agreement.
B. In the performance of its services under this Agreement the Consultant
will receive or be exposed to certain confidential information and trade secrets
(collectively referred to as "Confidential Information") of the Company. This
Confidential Information is among the Company's most important business assets
and the value of this Confidential Information would be diminished or
extinguished if it were disclosed in contravention of those provisions of this
Agreement.
AGREEMENT
In consideration of the mutual promises contained herein, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Effective Date. As of the date hereof (the "Effective Date"), this
Agreement shall become effective and shall supersede any other agreements
between the Consultant and the Company relating to the employment and/or
contract for services of the Consultant by the Company and such previous
agreement shall thereafter be deemed terminated for all purposes.
2. Consultation by the Consultant. The Consultant shall be reasonably
available during the period beginning on the Effective Date and ending on May
21, 1998 (the "Consulting Period") unless renewed pursuant to Section 6, to
perform such assignments as may be reasonably requested by the Company from time
to time, which assignments may include, but shall not be limited to, the
following:
(a) Interim Financing. The Consultant shall advise and assist with
respect to the completion of a proposed interim private financing of up to
$410,000 with respect to which the Company acknowledges that the Consultant has
been a principal advisor during the period immediately preceding the date of
this Agreement. The Consultant shall assist in finalizing an updated business
plan to be furnished to investors in such private placement, shall assist in
coordinating the
Company's contacts with investors participating in the private placement, and
otherwise assist in that offering.
(b) Canadian Public Offering. The Consultant shall advise and assist
the Company in its preparation for a public offering of its common stock in
Canada and the listing of the stock for trading upon the Vancouver Stock
Exchange in Vancouver, British Columbia. In this connection the Consultant will
assist the Company in selecting and engaging legal counsel to advise the Company
with respect to the Offering and independent accountants to serve as the
Company's auditors in the preparation of financial statements that are necessary
to be furnished to prospective investors in connection with such public
offering. The Consultant shall also assist the Company in selecting and engaging
investment bankers to represent the Company as underwriter or agent in
connection with the public offering of its common stock.
(c) Other Duties; Coordination and Reporting. The Consultant shall
be available at reasonable times for consultation with respect to strategic
planning for the Company, including financial and capital raising matters, both
related to and in addition to those specific consulting assignments described in
the preceding paragraphs of this Section 2. In performing its services
hereunder, the Consultant shall coordinate closely with the officers and
directors and other agents and advisors of the Company and shall keep the
officers of the Company fully advised at all times about the status of all
discussions with third parties concerning any of the services provided to the
Company hereunder. The Consultant shall furnish such reports concerning its
consulting activities at such intervals as the Company may, from time to time,
reasonably request.
3. Independent Contractor. The parties acknowledge that the Consultant is
acting as an independent contractor in furnishing the services provided for
hereunder and that neither the consultant nor any of its officers or agents is
an employee of the Company or subject to the supervision and direction of the
Company in the performance of its services. Nothing herein shall be deemed to
create a partnership, joint venture or other relationship between the Consultant
and the Company other than the consulting relationship described above.
4. Consulting Fee and Expenses.
(a) Consulting Fee. In consideration for the services to be provided
by the Consultant hereunder, the Consultant shall receive options to purchase up
to 240,000 shares of common stock of the Company (the "Consulting Fee") in the
following manner:
(i) Concurrently with the execution of this Agreement, the
Company shall grant to the Consultant options to purchase up to 90,000 shares of
common stock of the Company at an exercise price of $.50 per share. The options
shall be immediately exercisable, and expire on September 2, 1998. If requested
by the Consultant, the Company shall accept a non-interest bearing, 12 month
Promissory Note payable to the Company in payment of the exercise price of said
options. The Note shall be secured by the shares underlying the options if
requested by the Company.
-2-
(ii) In consideration of services to be performed hereunder,
concurrently with the execution of this Agreement the Company shall grant to the
Consultant options to purchase 150,000 shares of common stock of the Company
with an exercise price equal to the price per share received by the Company in
its Initial Public Offering scheduled for early 1998. The options shall be
exercisable immediately after the Initial Public Offering is completed and shall
expire five (5) years after that date.
(iii) The options provided for in the preceding paragraphs
shall be granted pursuant to the Company's Equity Compensation Plan, and shall
be evidenced by option agreements in form satisfactory to the Company and
Consultant.
(b) Expense Reimbursement. The Company shall reimburse the
Consultant, in accordance with the Company's expense reimbursement policies, for
reasonable out-of-pocket expenses incurred in connection with the services
provided pursuant to this Agreement upon presentation of an itemized accounting
of such expenses with reasonable supporting data.
5. Trade Secrets and Confidential Information. During the term of this
Agreement and for a period of five (5) years following the termination of
Consultant's services hereunder, the Consultant shall not, directly or
indirectly, use, disseminate, or disclose for any purpose other than at the
specific written request of the Company, any of the Company's Confidential
Information, unless such disclosure is compelled in a judicial or governmental
proceeding or is required by law; provided, however, that the Consultant shall
give the Company written notice of the Confidential Information to be so
disclosed or produced as far in advance of its disclosure or production as is
practicable and shall use his best efforts to obtain, to the greatest extent
practicable, an order or other reliable assurance that confidential treatment
will be accorded to such Confidential Information so required to be disclosed or
produced. All documents, records, notebooks, and similar repositories of records
containing information relating to any Confidential Information now in the
Consultant's possession or control, whether prepared by him or by others, shall
be left with the Company or returned to the Company upon its request.
Consultant agrees that any violation by the Consultant of the agreements
contained in Section 5 are likely to cause irreparable damage to the Company and
the Consultant therefore agrees that if there is a breach or threatened breach
by the Consultant of the provisions of said sections, the Company shall be
entitled to an injunction restraining the Consultant from such breach. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies for such breach or threatened breach.
6. Reliance on Company Information; Indemnification and Limitation of
Liability. The Company recognizes and confirms that in the performance of its
services hereunder: (i) Consultant may rely upon information provided by the
Company without independent verification and (ii) Consultant Does not assume
responsibility for the accuracy or completeness of such information, whether or
not it makes an independent verification.
-3-
In consideration of Consultant's agreement to act on the Company's behalf,
as provided herein, the Company agrees to indemnify and hold harmless Consultant
and its officers, directors, agents and employees against any loss, claim,
damage, liability, or expense, including reasonable counsel fees and expenses
("Losses") arising out of or to which Consultant may become subject in
connection with this engagement, unless such Loss results from Consultant's
gross negligence to wilful misconduct. The Company agrees to promptly reimburse
Consultant for any legal or other expenses as incurred in connection with
investigation or defending any such loss, claim, damage or liability (or action
in respect thereof). In no event shall Consultant be liable for acting in
accordance with instructions from the Company or any entity authorized to act on
its behalf..
7. Termination; Renewal. This Agreement and the Consultant's obligations
to perform services hereunder shall terminate at the end of the Consulting
Period unless renewed as provided hereafter. In the event the Company has not
consummated its Initial Public Offering of common stock by May 21, 1998 (the
"Termination Date"), this Agreement shall automatically be extended for such
period of time as is reasonably necessary to consummate the Initial Public
Offering; provided, however, that if an Initial Public Offering is not completed
by December 31, 1998, this Agreement may only be subsequently extended by the
written consent of both the Consultant and the Company.
8. Nonassignability; Successors. This Agreement provides for personal
services by the Consultant and its obligations hereunder may not be assigned or
delegated. The rights and obligations of the Company, and the rights of the
Consultant hereunder, shall bind and inure to the benefit of the successors of
the Consultant and the Company (including, in the case of the Company, any
successor to the business of the Company, whether by merger, consolidation,
acquisition of assets or any other transaction).
9. Entire Agreement. This Agreement is the entire agreement between the
parties and no representations, warranties or other statements or promises have
been made by either party to the other in connection with this Agreement.
10. Applicable Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Colorado.
-4-
SIGNATURES
IN WITNESS WHEREOF, the Consultant and the Company have caused this
Agreement to be executed and delivered as of the first date mentioned above.
THE COMPANY:
eSOFT, INC.
By: /s/Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx, President
THE CONSULTANT:
PANTHEON CAPITAL LTD.
By: /s/Xxxx Xxxxx
-----------------------------------
Xxxx Xxxxx, Director
-5-
