EXHIBIT 13
NON-STATUTORY STOCK OPTION AGREEMENT
This NON-STATUTORY STOCK OPTION AGREEMENT is made July 26, 2002, between
INFONOW CORPORATION (hereinafter referred to as the "Company"), and Xxxxxxx X.
Xxxxxxx (hereinafter referred to as "Optionee").
WHEREAS, Optionee is an important and valuable contributor to the Company
and the Company deems it to be in its interest and in the interest of its
shareholders to secure the services of Optionee for the Company or such of its
subsidiary companies as may be designated by the Company; and
WHEREAS, the Company, as an incentive to Optionee to continue to serve the
Company or its subsidiaries and to increase Optionee's proprietary interest in
the Company, desires to enter into this Agreement containing the terms and
conditions hereinafter set forth and to grant Optionee an option to purchase
shares of the Common Stock of the Company.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, and for other good and valuable consideration, the
parties agree as follows:
1. Grant of Option. In consideration of the foregoing, the Company hereby
grants to Optionee the right and option (hereinafter referred to as "the
option") to purchase 90,000 shares of the Company's Common Stock ("Shares")
pursuant to the following schedule: subject to Section 7.4 of the Company's 1999
Stock Option Plan (the "Plan"), are vested and exercisable as to 90,000 of the
underlying shares immediately upon issuance. In the event of resignation or
termination for other than cause, the underlying shares vested at the time of
such resignation or termination shall remain exercisable until the expiration of
the term of the option. The option shall terminate on the tenth anniversary of
the date hereof and, accordingly, may not be exercised after that date. The
purchase price to be paid for such Shares upon exercise of the option shall be
$1.075 per share, being not less than 100% of Fair Market Value of the Shares on
the date of this Agreement required under the Plan. This option is granted
pursuant to, and is subject to the terms and conditions of the Plan, a copy of
which has been furnished to Optionee and receipt of which Optionee hereby
acknowledges.
2. Method of Exercising Option. The option may be exercised, in whole at
any time or in part from time to time, by giving to the Company notice in
writing to that effect. Within thirty (30) days after the receipt by it of
notice of exercise of the option and upon due satisfaction of all conditions
pertaining to the option as set forth in this Agreement, the Company shall cause
certificates for the number of Shares with respect to which the option is
exercised to be issued in the name of Optionee, or his executors,
administrators, or other legal representatives, heirs, legatees, next of kin, or
distributees, and to be delivered to Optionee or his executors, administrators,
or other legal representatives, heirs, legatees, next of kin, or distributees.
Payment of the purchase price for the shares with respect to which the option is
exercised shall be made to the Company upon the delivery of such stock, together
with revenue stamps or checks in an amount sufficient to pay any stock transfer
taxes required on such delivery. The Company shall give the person or persons
entitled to the same at least five (5) days' notice of the time and place for
delivery and for the payment of such purchase price.
3. Conditions of Option. The option is subject to the following additional
conditions:
(a) The option herein granted to Optionee is not transferable by
Optionee during Optionee's lifetime, but may be transferred by will or the
laws of descent and distribution.
(b) The option may be exercised by Optionee pursuant to the terms of
the Plan, but only to the extent that Optionee had the right to exercise
such option at the date of termination of the Optionee's service to the
Company.
4. Representation as to Investment. Unless the Option and the shares are
registered pursuant to a then effective registration statement pursuant to the
Securities Act of 1933 and applicable state law, the exercise of such option and
the delivery of the Shares subject to it will be contingent upon the Company
being furnished by Optionee, his legal representatives, or other persons
entitled to exercise such option, with a statement in writing, in substantially
the form attached as Exhibit 2 hereto, that at the time of such exercise it is
his or their intention to acquire the Shares being purchased solely for
investment purposes and not with a view to distribution.
5. Notices. Any notice to be given by Optionee as required by this
Agreement shall be sent to the Company at its principal executive offices and
any notice from the Company to Optionee shall be sent to Optionee at his address
as it appears on the Company's books and records. Either party may change the
address to which notices are to be sent by informing the other party in writing
of the new address.
6. Restriction Against Assignment. Except as otherwise expressly provided
above, Optionee agrees on behalf of himself and of his executors and
administrators, heirs, legatees, distributees, and any other person or persons
claiming any benefits under him by virtue of this Agreement, that this Agreement
and the rights, interests, and benefits under it shall not be assigned,
transferred, pledged, or hypothecated in any way by Optionee or any executor,
administrator, heir, legatee, distributee, or other person claiming under
Optionee by virtue of this Agreement. Such rights, interest, or benefits shall
not be subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge or hypothecation, or other disposition of this
Agreement or of such rights, interests, and benefits contrary to the preceding
provisions, or the levy of any attachment or similar process thereupon, shall be
null and void and without effect.
7. Further Agreements. The undersigned agrees, in connection with the
issuance of the Shares, and thereafter from time to time as requested by the
Company, to execute any stockholders agreement as provided in the Plan. The
undersigned will, if requested, by the Company in connection with a public
offering of the Company's securities, adhere to lock-up arrangements between the
Company and an underwriter involved in such public offering.
The Company or Participating Subsidiary may take such steps as it may deem
necessary or appropriate for the withholding of any taxes or funds which the
Company or the Participating Subsidiary is required by any law or regulation of
any governmental authority, whether federal, state or local, domestic or
foreign, to withhold in connection with any Stock Options (collectively,
"Withholding Obligations"). Such steps may include, by way of example only and
not limitation, (i) requiring a Participant to remit to the Company in cash an
amount sufficient to satisfy such Withholding Obligations; (ii) allowing the
Participant to tender to the Company shares of Common Stock, the Fair Market
Value of which at the tender date the Committee determines to be sufficient to
satisfy such Withholding Obligations; (iii) withholding shares of Common Stock
otherwise issuable upon the exercise of a Stock Option and which have a Fair
Market Value at the exercise date sufficient to satisfy such Withholding
Obligations; or (iv) any combination of the foregoing.
The Optionee understands that the Company will require the Optionee to
satisfy any applicable Withholding Obligations in connection with this option or
Common Stock received pursuant thereto. The Optionee agrees to notify the
Company in writing within 10 days after the date the Optionee (i) first obtains
knowledge of any Internal Revenue Service inquiry, audit, assertion,
determination, investigation, or question relating in any manner to the value of
this option or any shares of Common Stock received pursuant hereto; (ii)
includes or agrees (including, without limitation, in any settlement, closing or
other similar agreement) to include in gross income with respect to this option
or any shares of Common Stock received pursuant hereto (A) any amount in excess
of the amount reported on Form 1099 or Form W-2 to the Optionee by the Company,
or (B) if no such Form was received, any amount; or (iii) exercises, sells,
disposes of, or otherwise transfers (other than to the Optionee's successors,
heirs, executors or administrators, as the case may be) this option. Upon
request, the Optionee shall provide to the Company any information or document
relating to any event described in the preceding sentence which the Company (in
its sole discretion) requires in order to calculate and substantiate any change
in the Company's tax liability as a result of such event.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Non-Statutory Stock Option Agreement as of the day and year first above written.
INFONOW CORPORATION
/s/ Xxxxx Xxxxxxxxx
---------------------------
Director, Chairman of Compensation Committee
/s/ Xxxxxxx Xxxxxxx
---------------------------
Optionee
EXHIBIT 1
NOTICE OF EXERCISE
TO: INFONOW CORPORATION
1. The undersigned hereby elects to purchase ___________________ shares of
Common Stock of INFONOW CORPORATION pursuant to the terms of the attached
Non-statutory Stock Option Agreement, and tenders herewith payment of the
purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
Date: _______________________________
Optionee
EXHIBIT 2
INVESTMENT REPRESENTATION STATEMENT
TO: INFONOW CORPORATION
With respect to the ____________________ shares of Common Stock ("Shares") of
INFONOW CORPORATION ("Company") which the undersigned ("Purchaser") has
purchased from the Company today, the Purchaser hereby represents and warrants
as follows:
1. The Purchaser acknowledges that he has received no formal prospectus or
offering memorandum describing the business and operations of the Company.
He has, however, by virtue of his relationship with the Company, been given
access to all information that he believes is material to his decision to
purchase the Shares. The Purchaser has had the opportunity to ask questions
of, and receive answers from, representatives of the Company concerning its
business operations. Any questions raised by the Purchaser have been
answered to his satisfaction.
2. The Shares are being acquired by the Purchaser for his account, for
investment purposes only, and not with a view to the distribution or resale
thereof.
3. No representations or promises have been made concerning the marketability
or value of the Shares. The Purchaser understands that there is currently
no market for the transfer of the Shares. The Purchaser further
acknowledges that, because the Shares have not been registered under the
Securities Act of 1933, and cannot be resold unless they are subsequently
registered under said Act or an exemption from registration is available,
the Purchaser must continue to bear the economic risk of his investment in
the Shares for an indefinite period of time. Specifically, the Purchaser
agrees that the Shares may not be transferred until the Company has
received an opinion of counsel reasonably satisfactory to it that the
proposed transfer will not violate federal or state securities laws unless
the Company receives this requirement. The Company has not agreed or
represented to the Purchaser that the Shares will be purchased or redeemed
from the Purchaser at any time in the future. Further, there have been no
representations, promises, or agreements that the Shares will be registered
under the Securities Act of 1933 at any time in the future or otherwise
qualified for sale under the applicable securities laws. The Purchaser
further understands that a notation will be made on the appropriate records
of the Company and on the Stock Certificate representing the Shares so that
the transfer of Shares will not be effected on those records without
compliance with the restrictions referred to above.
Date:
Purchaser
