EXHIBIT 4
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made May 22, 1997, between INFONOW CORPORATION (hereinafter
referred to as the "Company"), and Xxxxxxx Xxxxxxx (hereinafter referred to as
"Director").
WHEREAS, Director is an important and valuable Director with recognized
experience, and the Company deems it to be in its interest and in the interest
of its shareholders to secure the services of Director for the Company or such
of its subsidiary companies as may be designated by the Company; and
WHEREAS, the Company, as an incentive to Director to remain a Director of
the Company or its subsidiaries and to increase his proprietary interest in the
Company, desires to enter into this Agreement with him containing the terms and
conditions hereinafter set forth and to grant him 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 Director the right and option (hereinafter referred to as "the
option") to purchase 8,500 shares of the Company's Common Stock ("Shares")
pursuant to the following schedule: 1/3 of the shares will vest on May 22, 1997,
and 1/36 of the total shares will vest on the 22nd of each month thereafter. The
option shall terminate on May 22, 2007, and, accordingly may not be exercised
after that date. In the event that the Company's stock is listed on the
Vancouver Stock Exchange on October 1, 2002 and by such date has not achieved
advance board status, the option shall terminate on October 1, 2002. The
purchase price to be paid for such Common Shares upon exercise to the option
shall be $1.84 per share. That figure represents the fair market value of the
Shares on the date of this Agreement. This option is granted pursuant to, and is
subject to the terms and conditions of the Company's 1990 Stock Option Plan,
Amended and Restated as of March 28,1997, a copy of which has been furnished to
Director.
2. Method of Exercising Option. The option may be exercised, in full at one
time or in part from time to time, by giving to the Company written notice to
that effect. Within thirty (30) days after receipt of this written notice
regarding 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 Director, or his executors,
administrators, or other legal representatives, heirs legatees, next of kin, or
distributes, and to be delivered to Director or his executors, administrators,
or other legal representatives, heirs, legatees, next of kin, or distributes.
Payment of the purchase price for the shares with respect to which the options
is exercised shall be made to the Company upon 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) day's 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 Director shall not be transferable by
Director other than by will or the laws of descent and distribution, and shall
be exercisable, during his lifetime, only by him.
(b) The option may be exercised by Director only while he is in the
continuous employ of the Company or of a subsidiary of the Company, or on the
last day of the month next following the month in which Director ceases to be on
the Board of Directors (but not later than its specified expiration date), but
only to the extent that Director had the right to exercise such option at the
date of such termination.
(c) In the event that Director becomes disabled (within the meaning of
Section 22 (e)(3) of the Internal Revenue Code or any successor section), the
option may be exercised by the Director to the extent that it was exercisable on
the date he ceased to be on the Board of Directors of the Company or any
subsidiary on the last day of the 12th month from the date optionee (Director)
ceases to be on the Board of Directors from the date of termination (but not
later than its specified expiration date).
(d) In the event of the Director's death while on the Board of Directors or
within the period referred to in subparagraph (b) above, or the twelve (12)
month period referred to in subparagraph (c) above, then such option may be
exercised to the extent it was exercisable on the date of cessation from the
Board of Directors by his executors, administrators, or other legal
representatives, heirs, legatees, next of kin, or distributes within one (1)
year, but no later that one (1) year, after the date of at his death (but no
later than the specified expiration date).
4. Representation as to Investment. The exercise of such option and the
delivery of the Shares subject to it will be contingent upon the Company being
furnished by the Director, his legal representatives, or other persons entitled
to exercise such option with a statement in writing 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. Qualification of Option. The option is intended to qualify as an
incentive stock option within the meaning of the Internal Revenue Code of 1986,
as amended, and shall be so construed, provided, however, that nothing herein
shall be deemed to be or interpreted as a representation, guarantee, or other
undertaking on the part of the Company that such option is or will be determined
to be an incentive stock option within that or any other section of the Internal
Revenue Code.
6. Notices. Any notice to be given by Director as required by this
Agreement shall be sent to the Company at its principal executive offices and
any notice from the Company to Director shall be sent to Director 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.
7. Restriction against Assignment. Except as otherwise expressly provided
above, Director agrees on behalf of himself and of his executors and
administrators, heirs, legatees, distributes, and any other person or persons
claiming any benefits under him by virtue of this Agreement, that this Agreement
and the rights, interest, and benefits under it shall not be assigned,
transferred, pledged, or hypothecated in any way by Director or any executor,
administrator, heir, legatee, distributes, or other person claiming under
Director 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.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
its corporate name by its duly authorized corporate officers, and Director has
hereunto set his hand and seal, as of the day and year first above written.
ATTEST: INFONOW CORPORATION
BY: /s/ Xxxxx Xxxxxx BY: /s/ Xxxxxxx Xxxxxxx
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Xxxxx Xxxxxx Xxxxxxx Xxxxxxx
Secretary President
/s/ Xxxxxxx Xxxxxxx
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Director
