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MEDIA CONTACT: Dan Snyders
GD&A
303-623-2838
[email protected]
FOR IMMEDIATE RELEASE 720-231-9990 (Mobile)
September 5, 2000
Nina Piccinini
eSoft Inc.
303-444-1600 ext 3255
[email protected]
eSOFT AND GATEWAY ANNOUNCE EQUITY AGREEMENT RESOLUTION
AGREEMENT INCLUDES EXPANDED MARKETING AND DISTRIBUTION PACT
BROOMFIELD, COLO. -- eSoft Inc. (NASDAQ: ESFT), the company that provides
enhanced broadband solutions for small- to medium-sized enterprise markets,
announced today it has reached a resolution with Gateway Inc. that includes a
capital infusion of $12.5 million by Gateway, as well as an expanded sales,
marketing and distribution relationship.
Under terms of the agreement, Gateway will provide eSoft with a $12.5 million,
four year subordinated loan that is convertible into eSoft common stock. The
conversion will be at the fair market price of eSoft's common stock with a
minimum conversion price of $11 per share and a maximum conversion price of
$19.507 per share. This capital infusion amends and supercedes the second
tranche investment of the original stock purchase agreement between eSoft and
Gateway. As part of the agreement, eSoft will purchase 30,000 shares of Gateway
common stock for 3 million. The companies also agreed to restructure Gateway's
warrant to purchase 600,000 shares of eSoft common stock to provide for revised
performance targets and an exercise price of $11 per share.
Additionally, the companies agreed to an expanded sales, marketing and
distribution agreement. As part of the expanded marketing pact, Gateway has
agreed to minimum subscriber commitments through the end of 2001.
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eSOFT AND GATEWAY ANNOUNCE EQUITY AGREEMENT RESOLUTION
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"We believe that this resolution is in the best interests of eSoft and our
shareholders," said Jeff Finn, president and CEO of eSoft. "Our primary goals in
these discussions were to negotiate an investment structure that was favorable
to eSoft and our shareholders and preserve an important relationship which we
believe is key to our long term success. We believe we have successfully
accomplished both of these goals and can refocus on our day-to-day business
activities."
"We look forward to working with eSoft to continue to broaden our product
offerings in small and medium business," said John Todd, Gateway chief financial
officer. "The eSoft offering will be available across all Gateway Business
channels, including the Business Solution Centers and Gateway Country stores."
ABOUT eSOFT INC.
eSoft Inc. was founded in 1984 with headquarters in Broomfield, Colo. eSoft
provides a flexible, customizable and expandable product suite, enabling rapid
delivery of complete Internet connectivity solutions for the small- to medium-
sized enterprise market. eSoft's family of products provides businesses with
basic Internet applications, managed services and business-to-business
solutions. Contact eSoft at 295 Interlocken Blvd., #500, Broomfield, Colo.,
80021, USA; 303-444-1600 phone; 303-444-1640 fax; www.esoft.com.
# # #
eSoft is a trademark of eSoft, Inc. Gateway is a registered trademark of Gateway
Inc. All other brand and product names may be trademarks of the respective
companies with which they are associated.
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements often can
be identified by the use of terms such as "may," "will," "expect," "believe,"
"project," "estimate" or words of similar meaning. Readers should not place
undue reliance on these
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forward-looking statements, and eSoft will not necessarily update these
statements to reflect subsequent developments. In addition, these
forward-looking statements are subject to risks, uncertainties and important
factors that may cause actual results to differ materially from those
anticipated. These factors include adverse economic conditions, entry of new and
stronger competitors, inadequate capital, unexpected costs, failure to gain
product approval in foreign countries, failure to capitalize upon access to new
markets, the possibility that a competitor will develop a more comprehensive or
less expensive solution and delays in the market awareness of eSoft and its
products. Readers should review these factors and others, which are discussed in
reports that eSoft files with the Securities and Exchange Commission.
